Israeli troops gunned down three Palestinian militants in a hospital parking lot in the West Bank town of Jenin on Wednesday, and blocked all entrances to Nablus' crowded Old City with rubble and concrete blocks so they could pursue other wanted men in house-to-house searches.

Dozens of jeeps patrolled the narrow alleys of Nablus in the military's second raid on the militant stronghold this week, enforcing a curfew that locked tens of thousands of people inside their homes. The Israeli army, which has uncovered three explosives labs in the city this week, says most of the suicide bombers in attempted attacks in 2006 came from the Nablus area, a militant stronghold.

In Jenin, Israeli undercover troops in a black car fired at a vehicle carrying the three gunmen, witnesses said. The army confirmed its troops killed the men, saying they had helped to plan an attempted suicide bombing in Tel Aviv that was thwarted last week.

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Two of the militants were killed instantly, and the third, Ashraf Saadi, was shot dead after he scrambled out of the car and tried to escape, witnesses said. Saadi was the spokesman for Islamic Jihad, a militant group backed by Iran and Syria, and responsible for dozens of suicide bombings and rocket attacks against Israel.

The army said the troops had tried to arrest Saadi but he opened fire on them. Troops returned fire, killing two militants and injuring Saadi. After Saadi fled, continuing to fire, the troops shot him dead, the army said. One soldier was slightly wounded by gunfire.

In the Gaza Strip, Islamic Jihad spokesman Abu Ahmad vowed retaliation.

"This new crime will not pass without tough punishment," he said in a text message sent to reporters.

Hamas, the Islamic militant group that dominates the Palestinian parliament and government, also swore revenge.

In Nablus, dozens of jeeps backed by bulldozers carried soldiers back into the city at dawn, renewing an operation that was briefly halted on Tuesday after three days.

At least three bulldozers piled up rubble and large concrete blocks at all entrances to the Old City, a jumble of alleys and cramped apartment buildings. The curfew they clamped down confined more than 50,000 people to their homes.

Fugitives were in hiding and did not engage the raiding troops in gunbattles. But Palestinian officials said 10 people were wounded as troops firing bullets clashed with Palestinian youths throwing stones. Fifty people were detained, the officials said.

The army said five suspects were arrested.

The operation in Nablus is the largest in the West Bank in months. Israel has frequently used such raids to try to crush militant activity and thwart suicide bombings.

One Palestinian civilian has been killed since the operation began on Sunday. Five militants have been arrested in all, the army said.

Palestinian Prime Minister Ismail Haniyeh of Hamas accused Israel of trying to undermine Palestinian efforts to form a new unity government. Hamas and the rival Fatah movement are trying to finalize a power-sharing deal reached in Saudi Arabia earlier this month designed to halt months of infighting.

"It's clear that this Israeli escalation ... is tied directly to Israel's rejection of the Mecca agreement, which strengthened national unity," Haniyeh said in Gaza.

In Jerusalem, meanwhile, Israeli police broke up a news conference called by Muslim and Christian leaders who oppose Israeli excavation work near a disputed holy site.

Police delivered a cancellation order at the east Jerusalem hotel where the event was scheduled, saying the news conference was organized by Hamas, which Israel classifies as a terrorist group. The event was scheduled by the Al Aqsa Foundation. Israel says the foundation is tied to Hamas but organizers denied this.

Later, organizers moved the event to a nearby hotel. But police quickly moved in and broke up the event without incident.

"We strongly condemn this juvenile behavior," said Sheik Raed Salah, a leader of the Israeli Islamic Movement and organizer of the event. "This behavior does not protect security. It actually makes the security situation explosive."

The disputed holy site is the hilltop compound known to Muslims as the Noble Sanctuary and to Jews as Temple Mount.

Home to the Al Aqsa mosque and the gold-capped Dome of the Rock, the complex is Islam's third-holiest shrine, and the dig has inflamed Muslim fears that Israel is planning to damage it.

The site also is Judaism's holiest spot. Jews have gathered for centuries to pray outside the compound at the Western Wall, a remnant of the ancient biblical temples.

Israel says the dig is meant to salvage archaeological finds before a new pedestrian walkway to the compound is built. The walkway was damaged in a 2004 snowstorm, and Israeli archaeologists insist the work poses no danger to the Islamic shrine.

Complete coverage is available in FOXNews.com's Mideast Center.