Palestinians accused the United States on Friday of granting Israel a licence to kill by vetoing UN condemnation of its assassination of Hamas leader Sheikh Ahmed Yassin.
Israeli forces killed two Hamas frogmen who came ashore overnight near a Jewish settlement in the Gaza Strip, after the group said it would launch "earthquake-like" attacks to avenge Yassin.
A car exploded near the West Bank city of Nablus, killing a militant who was apparently rigging it as a bomb. The 22-year-old Palestinian, from an armed faction of President Yasser Arafat's Fatah movement, was cut in half by the blast.
At the United Nations, the United States late on Thursday vetoed a Security Council resolution by Arab nations to censure Israel for assassinating Hamas's wheelchair-bound founder in a missile strike outside a Gaza mosque on Monday.
Washington, alone among major powers in not condemning Monday's assassination as an extra-judicial killing, rejected the resolution because it did not also denounce Hamas for suicide bombings in Israel.
The vote was 11 in favour, three abstentions, and the United States veto that killed the measure.
"Israel's action has escalated tensions in Gaza and the region, and could set back our effort to resume progress towards peace," US Ambassador John Negroponte said in a statement.
But he added: "This Security Council does nothing to contribute to a peaceful settlement when it condemns one party's actions and turns a blind eye to everything else occurring in the region."
Palestinians denounced the US action, and 10,000 people demonstrated in the West Bank against Yassin's killing.
"I'm afraid this US veto will be taken by Israel as encouragement to continue on the path of violence and escalation, assassinations and reoccupation" of Palestinian territory, cabinet minister Saeb Erekat told Reuters.
Calling the United States the "chairman of the axis of evil in the world", Hamas political leader Mohammad Ghazal said the veto was "Israel's green light to carry out assaults and crimes".
An Israeli government official in Jerusalem welcomed the US veto but expressed disappointment that Washington had been left no other option. "We are troubled by this cynical attempt to condemn those who are fighting terrorism without denouncing the terrorists themselves," he said.
TEHRAN MARCH: In Tehran, 5,000 people marched in protest against Yassin's killing, chanting "Death to Israel, death to America".
Worshippers at Friday prayers in the Gaza mosque where Yassin had prayed minutes before his assassination wept and demanded revenge as they looked upon the empty spot where the paralysed 67-year-old cleric used to sit in his wheelchair.
In the Security Council, Britain, Germany and Romania abstained after Algeria, negotiating for Arab nations, rejected an amendment they wanted that would have condemned "atrocities" against Israelis.
The Algerian draft condemned "the most recent extra-judicial execution committed by Israel" and "all attacks against any civilians as well as all acts of violence and destruction".
Israel is vowing to kill more militants it sees as the masterminds behind suicide bombings that have killed hundreds of Israelis during a nearly 3-1/2 year Palestinian uprising.
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