JERUSALEM - Israeli combat helicopters, attempting to rescue Jewish settlers trapped on a rocky West Bank hillside, traded heavy fire with Palestinian gunmen in a five-hour shootout Thursday. Two people died and at least 18 were wounded.
Israel's prime minister declared it a ''gross violation'' of a shaky truce announced two days earlier. Both the Palestinians and the Israelis said the other side fired first.
The firefight amid the barren rocks of Mount Ebal, overlooking the West Bank town of Nablus, came on the eve of a Friday deadline imposed by both sides for ending three weeks of violence that has left more than 100 dead, the vast majority Palestinians.
One of those killed Thursday was a Palestinian and the other was an Israeli civilian who bled to death awaiting rescue. Israelis were especially outraged that the Palestinian Authority did not force the gunmen to retreat to allow Israeli rescuers access to the wounded.
''This is a very grave incident and a gross violation by the Palestinian Authority,'' Israeli Prime Minister Ehud Barak said in a statement issued after the battle ended and the settlers were evacuated.
The wounded included 15 Palestinians and at least three Israelis, according to Palestinian doctors and Israeli security officials.
It was not immediately clear whether Israel or the Palestinians were backing away from the truce, but the shootout appeared to be a serious threat to the deal announced Tuesday at a Mideast summit in Egypt.
Trouble broke out when about 40 Jewish settlers tried to travel to the hillside to observe Joseph's Tomb, a holy site in Nablus recently ransacked by a Palestinian mob.
The settlers came under fire from a Palestinian refugee camp, and Israeli helicopter gunships soon joined the fray in an attempt to protect some 40 settlers, including women and children, and evacuate the wounded, according to Israelis.
Two helicopters hovered, unleashing machine-gun fire on Palestinians darting for cover behind the huge stones on a mountain nicknamed the ''accursed mountain'' for its stark landscape. Palestinians returned antiaircraft fire, a first in the four-week conflict.
''We are engaged in a rescue operation on very difficult terrain,'' Israeli Maj. Gen. Yitzhak Eitan said on Israel radio as the shooting raged. ''We have deployed a large force which is firing under fire.''
Col. Raanan Gissin confirmed the army had given permission for the settlers' outing, and said the military would investigate who exactly gave it and why. Such outings had been banned due to the violence.
The settlers were scattered across the hillside, making it difficult for the Israeli forces to reach all of those trapped. Several of the wounded Israelis could not be evacuated immediately due to the heavy Palestinian fire.
Both Israeli television stations broadcast nonstop coverage of the gunfight, running footage caught at its outbreak over and over again and maintaining phone contact with the settlers. One settler, pinned down by the gunfire, was interviewed on his cellular telephone by Israel's Channel 2 TV.
''Under fire for five hours straight,'' said Elazar Mizrahi, the staccato of automatic fire audible in the background. ''There are still gunshots. Hiding. Others 30 meters (yards) from me. We came to tour the area. I'm hiding behind a rock. I can't leave here.''
Each side offered widely differing accounts of how the battle started.
The settlers had prior army permission to climb the hill so they could observe Joseph's Tomb, which was desecrated after Israeli troops pulled out two weeks ago. They said Palestinian gunmen opened fire, but the Palestinians claimed the settlers fired first on unarmed olive pickers.
The battle died out after dark, while Israel moved tanks and armored personnel carriers to the outskirts of Nablus. Tanks had been moved away just a day earlier in an effort to reduce tensions.
Nablus has remained extremely tense despite the military's withdrawal from the holy site. The settlers have vowed to return to the tomb, though it is in the middle of the restive Palestinian city.
After the truce was announced in Egypt, the two sides agreed Wednesday to wait 48 hours, until around midday Friday, to determine whether it was working.
''The drop in the level of activity of the Palestinians is not enough and does not satisfy us,'' Deputy Defense Minister Ephraim Sneh said on Army radio. ''We are halfway through the period and when it is over (Friday) we will decide what to do next.''
Ideally, if the truce holds, the Israelis are to pull back troops from the outskirts of Palestinian cities, security teams from the two sides are expected to hold additional talks, and the Palestinians are to continue working to rein in militants.
But if unrest persists, the agreement mediated by President Clinton could quickly disintegrate.
In Cairo, Egypt, a top aide to Palestinian leader Yasser Arafat said Israel had so far only made minimal efforts to implement the cease-fire.
''Israel wants to kill the Palestinian people and to keep them under siege, and to put them under pressure that they could not bear,'' said the aide, Nabil Shaath.
The truce was supposed to prepare the ground for a second stage - a two-week recovery program aimed at reviving negotiations on a comprehensive peace settlement.
Since the agreement, Israel has lifted the internal closure on Palestinian areas, which allowed Palestinians to resume travel between towns inside the West Bank and Gaza.
The Israelis opened border crossings to Egypt and Jordan, and trucks hauling goods again started to move between Gaza and Israel. The Palestinians were allowed to reopen their airport in Gaza after a 10-day closure.
However, Israel has yet to lift a closure between Israel and the Palestinian areas, barring tens of thousands of Palestinians from their jobs.
For their part, the Palestinians have begun to re-arrest some of the freed Islamic militants. The Palestinian leadership also issued ''strict orders'' to observe the truce.
Earlier Thursday, two Palestinian policemen died in an apparent gas explosion at the Bethlehem headquarters of Palestinian leader Yasser Arafat's elite Force 17 unit. A Palestinian police spokesman said the explosion was an accident.