Israeli troops have stepped up patrols in the West Bank town of Bethlehem after a sniper shot dead an Israeli army officer outside the Church of the Nativity.

Two tanks which rolled into Manger Square just after the attacks late on Tuesday have now pulled back but troops are still patrolling the town in jeeps and armoured vehicles.

Both the West Bank and Gaza Strip have been sealed off from Israel amid fears of suicide attacks by Palestinian militants during the Muslim holiday of Eid al-Adha which ends on Friday.

Three Palestinians were killed in clashes with Israeli troops in the territories on Wednesday.

Flechette shell

Troops killed two men as they tried to climb a fence protecting the Dugit Jewish settlement in the north-western Gaza Strip early on Wednesday morning, the Israeli army said.

A spokeswoman for the army, Sharon Feingold, told the Associated Press that the army had killed the two with a single flechette shell - a munition which release deadly darts over a wide area.

Knives and grenades were found on the dead men's bodies, the army added.

Dugit has previously been targeted by Palestinian militants, who have carried out scores of attacks on Jewish settlements in the West Bank and Gaza Strip since the start of the Palestinian intifada (uprising) two-and-a-half years ago.

In the West Bank town of Nablus, a 22-year-old Palestinian was shot and killed when an Israeli arrest party exchanged fire with gunmen.

The army, which said it had arrested a senior member of the Al Aqsa Martyrs Brigade militant group named Kamel Khatib, said the man had been throwing rocks.

Closed zone

Troops imposed a curfew on Bethlehem after the shooting of 24-year-old Captain Shahar Shmul.

The officer was shot outside the Church of the Nativity

He was shot in the neck as an Israeli patrol was investigating a suspicious vehicle near the Church of the Nativity, the traditional birthplace of Jesus.

Palestinian witnesses say he was killed by a single shot.

Israeli forces have been patrolling the town since a Palestinian suicide bomber from Bethlehem blew up a bus in Jerusalem last November, killing 11 passengers, but tanks had kept to the outskirts of the town until Tuesday.

The Israeli security forces have detained 15 suspected militants in the town in the last three months, AFP news agency quoted an Israeli army spokesman as saying.

Truce hopes fade

The flare-up in violence comes amid tentative moves to arrange a cease-fire between Israel and the Palestinians.

Last week, Israeli Prime Minister Ariel Sharon met leading Palestinian official Ahmed Qurei for talks on withdrawing Israeli troops from Palestinian areas in return for security guarantees.

A similar plan, involving a pull-back from Bethlehem at the end of last year, failed to take hold.