The attack, which came as Palestinian militant groups were discussing a temporary halt in attacks on Israelis, occurred on a highway close to the Israeli town of Kfar Saba, which lies on the other side of the road from Qalqiliya.
Police said they assumed the shooting came from the West Bank and they had sealed off the area and launched a hunt for the attackers.
Palestinian Prime Minister Mahmoud Abbas met with Palestinian militant leaders earlier Tuesday to try to negotiate an end to attacks on Israelis, as Israel weighed the implications of releasing uprising leader Marwan Barghouti as part of a possible cease-fire deal.
John Wolf, a U.S. envoy sent with a team of monitors to supervise the road map's implementation, met Tuesday morning with Abbas.
The potential release of Barghouti, probably the second most popular Palestinian leader after Yasser Arafat, could strengthen a new U.S.-backed peace plan if he were to actively campaign on its behalf. From prison, where Israel is holding him on murder charges, Barghouti has been working through envoys to persuade Hamas to sign on to the truce agreement with Abbas.
The prospects of the cease-fire effort appeared to be gaining some momentum as a result of tremendous Palestinian, Egyptian, and international pressure backed up by the prospect of a serious Israeli campaign to wipe the militants out. A deal would apparently require Israel to commit to ending killings of militant leaders.
Hamas and Islamic Jihad have said in principle they're ready for a cease-fire if Israel stops targeting their leaders and releases prisoners, reports CBS News Correspondent Robert Berger. They also want Israel to withdraw to positions held before the outbreak of fighting in September 2000.
Israel TV reported Tuesday that Israel would accept a cease-fire of three to six weeks. Israeli officials were not available for comment, but have been warning that a brief cease-fire would only allow the militant groups to rearm and plan further attacks.
Palestinian security chief Mohammed Dahlan met Tuesday evening with a senior Israeli defense official, Maj. Gen. Amos Gilad, Palestinian officials said. Israel Army Radio said the two agreed to continue their meetings. Their first one was Saturday, restoring high-level security contacts after a break of more than a year.
Abdel Aziz Rantisi, a hard-line Hamas leader, said Tuesday that the group was considering an end to attacks only on Israeli civilians inside Israel, and would in any case continue targeting soldiers and Jewish settlers in the West Bank and Gaza, a formulation Israel rejects.
Israel has said it would continue its offensive against Hamas and has so far reacted with great suspicion to Abbas' idea of a long-term cease-fire, fearing the violent groups would use the time to regroup, rearm and plan new attacks.
Israeli officials are demanding Abbas crack down on the groups. Abbas has said he will not use force against the militants for fear of triggering a civil war. Under the U.S. "road map" peace plan Abbas must "arrest, disrupt and restrain" those planning attacks and dismantle "terrorist capabilities and infrastructure."
Abbas' meeting with leaders of all the Palestinian militant factions Tuesday evening was part of a strong international push for a rapid agreement to end the violence.
In recent days, Egyptian mediators traveled to Gaza to try to persuade the militants to lay down their arms, and some Palestinian officials said they were confident a deal could be reached in the coming days.
Palestinian legislator Hanan Ashrawi said the talks were going well. "Maybe, after 24 hours, there will be positive results," she said after meeting with Amr Moussa, the secretary general of the Arab league, in Cairo on Tuesday.
A source close to the talks said U.S. mediators would press Israel to end the targeted killings, and that if it succeeded, the militant groups would then agree to a truce.
As part of the road map, which envisions an end to 32 months of violence and the creation of a Palestinian state by 2005, Israel must take down settlement outposts in the West Bank and halt attacks "undermining trust" with the Palestinians.
But continued violence, including a Hamas suicide bombing in Jerusalem and Israeli helicopter strikes in Gaza, have left the road map's future in doubt just two weeks after it was launched by U.S. President George W. Bush at a summit in Jordan.
U.S. Secretary of State Colin Powell was headed to Israel on Friday to meet with top officials in a visit that proves the U.S. commitment to the peace plan, Israeli Foreign Minister Silvan Shalom told Israel Radio on Tuesday.
Speaking en route to Cambodia, Powell lent support to Israel's demand for a crackdown.
Ultimately, Hamas and other terrorist organizations "will not only have to stop these terrorist attacks. We have to eliminate their capability to do so," he said. "We have to come down hard on organizations such as Hamas, which try to claim that they are a political organization at the same time that they have an armed wing that is conducting terrorist activities."
As part of the improved atmosphere, Israeli officials said they were offering to withdraw their forces from most of the Gaza Strip and at least one West Bank town — areas that are supposed to be under Palestinian control but were reoccupied during the current fighting.
But a senior Palestinian security source said Tuesday that Israel's withdrawal plan basically consisted of nothing more than moving a few tanks out of the Gaza town of Beit Hanoun.
The Palestinians wanted Israel to remove roadblocks and troops from the main roads in Gaza so residents would feel an immediate improvement in their quality of life, but they refused, the source said.
Earlier Tuesday, Arafat told Barghouti's wife, Fadwa, that Israel would release the uprising leader in the next two days, she said.
Israeli Attorney General Elyakim Rubinstein wrote to Prime Minister Ariel Sharon that it would be "inconceivable" to release Barghouti, whom he called a "first-rate architect of terrorism," before the end of his trial for his alleged role in attacks that killed 26 Israelis.
Shalom denied reports Barghouti's release was being considered as part of the cease-fire package.
One of Barghouti's lawyers was in Cairo last week for discussions with Egyptian officials, leading to speculation a deal might be in the works to trade Barghouti for Azzam Azzam, an Israeli Arab imprisoned in Egypt since 1997 on espionage charges.
Meanwhile, violence continued Tuesday as clashes erupted between Israeli soldiers and Palestinians in the Balata and Askar refugee camps in the West Bank.
A 14-year-old Palestinian was shot in the leg with live bullets in Balata and an Associated Press photographer was lightly injured and one of his cameras was destroyed when he was shot with rubber bullets.
An army spokesman said shots were fired at its troops in Balata and it responded with warning shots.