A Palestinian gunman opened fire at a bus stop outside a West Bank settlement on Thursday, shooting at soldiers and civilians and killing at least two Israelis before fleeing, the military and Israel's rescue service said.

The deaths extend a violent week that began with a shooting outside a West Bank settlement on Sunday, resulting in the death of a baby who was delivered prematurely following the weekend attack, and continued with the killing of two Palestinians wanted in that and another attack on Israelis in the West Bank.

The Israeli military said the assailant stepped out of his car and fired at the bus stop, wounding several people and then fleeing the scene. It said forces were searching the area for the attacker.

Eli Bin, the head of Israel's Magen David Adom service, told Israeli Army Radio that two people were killed in the shooting, which occurred at a location about a ten-minute drive south from the place of Sunday's attack. Their identities were not immediately known.

A later statement from the service said paramedics arrived at a bus stop to find four "youngsters" with gunshot wounds.

While the West Bank experiences occasional deadly violence, often between Israeli troops and Palestinian protesters, much of the Israeli-Palestinian bloodshed in recent months has been limited to the Gaza Strip, where some 175 Palestinians have been killed by Israeli fire in border protests.

"In recent days, we definitely feel like the situation (in the West Bank) is getting worse," Shalom Galil, a paramedic who assisted at the scene of the shooting, told Israeli Army Radio.

The shooting comes hours after Israeli security forces tracked down and killed a Palestinian accused of killing two Israelis.

Israeli police said Ashraf Naalweh was found armed near the West Bank city of Nablus and was killed during an arrest raid.

Israel accuses Naalweh of shooting to death two Israelis and wounding another at an attack on a West Bank industrial zone in October. He fled the scene and Israeli forces have been searching for him since.

"Israel's long arm will reach anyone who harms Israeli citizens," Israeli Prime Minister Benjamin Netanyahu said.

Police said it had made a number of arrests in its attempt to hunt down Naalweh and suspected he was planning on carrying out another attack.

On Wednesday, Israeli forces killed Salah Barghouti, a Palestinian suspect wanted in the drive-by shooting earlier this week at a West Bank bus stop.

In Sunday night's attack, assailants in a Palestinian vehicle opened fire at a bus stop outside a West Bank settlement, wounding seven people, including a 21-year-old pregnant woman, before speeding away.

The militant Hamas group that rules the Gaza Strip said that both Barghouti and Naalweh were its members but stopped short of claiming responsibility for the attacks the two carried out.

"The flame of resistance in the (West) Bank will remain alive until the occupation is defeated on all our land," Hamas said.

Also Thursday, police said an assailant stabbed two officers in Jerusalem's Old City, wounding them lightly. The officers opened fire on the attacker and he was killed, spokesman Micky Rosenfeld said.

Police identified the man as a 26-year-old Palestinian from the West Bank. It released security camera footage that shows the man lunging toward the officers and appearing to stab them.