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Israel is on high alert after a Palestinian motorist rammed a jeep of Israeli intelligence officers in the West Bank and then attacked them with an axe.
The man, identified as 35-year-old construction worker Hatem Shadid, was shot dead during the incident on Monday.
Israeli officials called the assault a terrorist attack and said two people in the jeep were also wounded.
The incident took place just west of the Palestinian city of Nablus on a road outside a Jewish settlement.
Tensions in the West Bank are high after Israeli's eight-day bombardment of the Gaza Strip last month that killed more than a hundred Palestinians.
The United Nations' recent recognition of Palestinian Statehood has strained relations further.
Shortly after the announcement, Israeli Prime Minister Benjamin Netanyahu said he planned to extend Jewish settlements in the occupied territories.