That's according to Israel Radio, which quotes rescue workers as saying that gunshots were fired at a car, wounding two Israelis, one of them seriously.
The attack in Ramallah came less than a day after Israel launched its third airstrike in 24 hours.
Israeli helicopters fired several missiles at the car of a Hamas fugitive Thursday, killing seven people, including the wanted man, his wife and 2-year-old daughter.
The increasingly deadly confrontation – with 37 killed and more than 130 wounded on both sides in just two days – left little hope that President Bush's Mideast peace initiative, launched just a week ago, will survive.
Hamas said it would unleash multiple attacks and urged foreigners to leave Israel for their safety. Israeli Prime Minister Ariel Sharon said that despite a new U.S.-backed peace plan, he would hunt Palestinian militants "to the bitter end."
The intensity of Israel's strikes in recent days comes as expectations fade that the new Palestinian prime minister, Mahmoud Abbas, can rein in militants.
Secretary of State Colin Powell was preparing to meet in Jordan with leaders of Russia, the European Union and the United Nations in an effort to repair the tattered peace plan, according to U.S. officials and diplomatic sources.
The meeting, tentatively set for June 22, will be held in Aqaba, where President Bush reached agreement last week with Sharon and Abbas to proceed with the peacemaking blueprint.
In a shift in strategy, the White House is declaring open season on Hamas, denouncing the terrorist group as an enemy to peace, reports CBS News Correspondent Mark Knoller.
White House spokesman Ari Fleischer said there's a need for all parties in the Middle East to stop Hamas. "The issue is Hamas," Fleischer said.
Earlier in the week, President Bush scolded Israel for its attempt to assassinate a Hamas leader in Gaza. But now, Fleischer says it's important for everybody in the Middle East to work together to defeat Hamas and violent terrorist groups.
Abbas has said he will not force a showdown, but will try to persuade Hamas and other groups to halt attacks on Israelis.
Hamas walked away from truce talks last week and threatened revenge after Israel's botched attempt to kill a Hamas founder, Abdel Aziz Rantisi, on Tuesday. The group issued a statement, urging its military cells to "blow up the Zionist entity and tear it to pieces."
Hamas has often fulfilled its threats since it carried out its first suicide bombings in the mid-1990s.
Sharon said Wednesday that he remains committed to negotiating a peace deal, but will continue to pursue Palestinian groups "to the bitter end."
In a Cabinet meeting Thursday, Sharon ridiculed Palestinian leaders as "crybabies" for saying they can't dismantle militias by force, according to a Cabinet official who briefed reporters. Israel said it cannot stand by until Abbas — described by Sharon Thursday as a "chick that hasn't grown its feathers yet" — persuades armed groups to halt attacks, the official said.
Palestinian Cabinet Minister Yasser Abed Rabbo said Sharon's intention was to derail the latest peace plan.
Referring to Sharon's comments on Palestinian leaders, Abed Rabbo said: "His aim is to discredit the Palestinian government and to assassinate his real enemy, which is the road map."
In the latest rocket attack Thursday, Israeli helicopters fired missiles at a car belonging to Yasser Taha, a Hamas fugitive from the group's military wing.
Seven people were killed, including Taha, his wife Fatima, 25, and their 2-year-old daughter, Asnan, doctors said. A baby bottle and baby shoes were pulled from the burning car. The strike injured 29 people.
Israel targeted the car in Gaza City's Sheik Radwan neighborhood, near a cemetery, where relatives earlier buried 11 dead from Wednesday's airstrikes. At least one missile landed as bystanders surrounded Taha's car, witnesses said.
The deadly chain of events began last week with a Mideast peace summit, at which Sharon and Abbas promised Bush to get started on the peace plan.
Two days later, a Hamas leader, Abdel Aziz Rantisi, announced that the group is breaking off truce talks with Abbas, and over the weekend, gunmen from Hamas and other militias killed five Israeli soldiers in shootings.
On Tuesday, Israel tried to kill Rantisi, who escaped a missile strike with minor injuries. Hamas threatened revenge, and on Wednesday, a Hamas suicide bomber killed 17 people in a Jerusalem bus blast. That attack was followed by three rocket strikes against Hamas fugitives that killed 18 Palestinians in Gaza City, half of them civilians.
Later Thursday, an Israeli motorist was killed in a Palestinian shooting attack in the West Bank.