They said the soldiers opened fire at random, conducting house-to-house searches and blowing open front doors.

The Israeli incursion prevented dozens of Palestinian pupils in the Old City from attending an end of school exam scheduled on Thursday.

Thursday's operation came a day after 12 Palestinians were killed in Israeli operations in the Gaza Strip.

"We condemn the Israeli military operation ongoing in Nablus and which was launched shortly after those in Gaza," said Salam Fayyad, the Palestinian prime minister, during a meeting with religious leaders in Ramallah.

"Here we see an Israeli attempt to sabotage our efforts towards restoring security," he added.

Injuries and arrests

The Israeli military said an officer and a soldier were severely wounded, and two others lightly hurt, in a Palestinian bomb attack during the operation, which began overnight.

"Another IDF officer was moderately wounded when Palestinians activated an explosive device in a separate incident overnight," it added.

Two suspected fighters from Fatah party were arrested and weapons confiscated, the army said.

The Al-Aqsa Brigades, an armed group linked to Fatah, issued a statement claiming responsibility for throwing explosive devices at Israeli troops.

Local Palestinian sources said several suspects were arrested.