Mohammad Shawa, a local head of the Al-Aqsa Martyrs Brigades, linked to Palestinian leader Yasser Arafat's Fatah movement, was killed in an exchange of fire with Israeli troops overnight in the northern West Bank town of Qalqiliya, a Palestinian security source said.

The 31-year-old had been hit after be opened fire and then attempted to flee from soldiers trying to arrest him. One of his supporters was wounded and arrested in the raid, which was backed by armoured cars.

As 5,000 people gathered in the streets of Qalqilya for his funeral, masked and gun-toting militants from the group promised quick revenge.

A message shouted over loudspeakers said: "We are free from the truce because the Israeli army is continuing its assassinations and we will carry out our revenge in the next 24 hours!".

The Brigades issued a statement Monday saying they would respect a truce announced by four other groups a day earlier. Among other things, the ceasefire is conditioned on Israel ending its targeted killing of militants.

The peace process was also undermined by the rocket attack in the Gaza Strip, which prompted a formal protest by Israel to Palestinian authorities.

The Israelis closed the main north-south Gaza highway for several hours in the morning, then reopened it, after three rockets were fired at the settlement of Kfar Darom, lightly injuring three Israelis.

That attack also drew the condemnation of Palestinian prime minister Mahmud Abbas, who described it and the killing of a Bulgarian construction worker in the West Bank on Monday as "acts of sabotage which we reject."

Three Palestinians were also wounded when Israeli troops posted near the road opened fire on cars piling up at a checkpoint, Palestinian security sources and witnesses added.

Soldiers had dragged concrete blocks onto the road at the Abu Gholi and Al-Matahen checkpoints, in the central and southern Gaza Strip, trapping cars between the two, witnesses said.

Palestinian security officials had already complained of several "violations" of the security agreement that led to Sunday night's partial Israeli pullback from the Gaza Strip.

The violence served to underline the scale of the problems facing the US-backed "roadmap" for peace, which had gained momentum in recent days.

Meanwhile, the Israeli army and Palestinian forces traded accusations Thursday over incidents in the Gaza Strip that threatened the fledgling security agreements between the two sides.

Al-Aqsa Martyrs Brigades, an armed offshoot of Palestinian leader Yasser Arafat's Fatah group, also vowed swift revenge following the killing one of its militants on Wednesday, as the Palestinian truce came under strain.

The Israeli army reblocked the main north-south road in the Gaza Strip Thursday after a rocket attack on a Jewish settlement earlier the same day that slightly injured three people.

Israel formally handed over control of the West Bank town of Bethlehem Wednesday following a similar withdrawal from part of northern Gaza three days earlier.