MERON JUNCTION -- Bus bombing in northern Israel and a shooting rampage outside Bait-ul-Moqaddas' old city, only hours apart Sunday, left 12 people dead and scores injured, setting the country reeling as it scrambled to stop a rising tide of Palestinian *** intifada***, AFP reported.

A bomb gutted a bus near the town of Safad, north of Lake Galilee, at 8:57 a.m. (0557 GMT), ripping a fireball through the back of the vehicle and tearing away its roof, witnesses and a police spokesman said.

At least nine people were killed and 50 wounded, 20 of them seriously, in the blast at this roadside Rest area.

The Islamic activist group Hamas claimed the attack, calling it a "martyr operation", or suicide bombing. However, police said they were not sure whether it was a kamikaze attack or a bombing.

Bodies draped in blankets lined the grass at the scene of the carnage, while shafts of twisted metal from the bus littered the road.

Barely three hours later, a gunman opened fire on an Israeli telephone company car in East Bait-ul-Moqaddas just outside Damascus gate, the main entrance to the Arab quarter of the old city, said Police Chief Micky Levy.

The attack killed three people, including the gunman, and left 10 wounded, Levy said.

The Palestinian, armed with a handgun, first fired on the Bezek telephone company car, wounding the driver, and then opened the vehicle's door and shot at close range a Bezek security guard sitting in the passenger seat, Levy said.

The guard later died from his wounds.

A gun battle then broke out between the shooter and police who rushed to the scene from a nearby police station, Levy said. A Palestinian passerby was gunned down in the crossfire, before the shooter was shot dead, he added.

The shooting appeared to be one in a wave of revenge attacks since an Israeli air raid on Gaza City on July 22 that killed Hamas' military chief Salaha Shehade, his bodyguard and 13 others, including nine children. Claiming Sunday's bus blast, Hamas' armed wing, the Ezzedine al-Qassem Brigades, said the attack was a "further riposte to the killing of our leader Salah Shehade."

Hamas had vowed on Thursday to kill 100 Israelis for every Palestinian leader that Israel killed.

The group already claimed a bomb attack in the name of Shehade at Bait-ul-Moqaddas Hebrew University on Wednesday that left two Israelis and five Americans dead.

That attack prompted a swift Israeli tank raid Friday on the center of Nablus in the northern West Bank, where Israel said the bomb was made and where the troops remained Sunday.

The army said three soldiers were slightly wounded by an explosion in Nablus, where the army has dynamited three bomb-making factories since Friday and detained at least 50 people.

Settler sources also said an Israeli car had been shot at in the northern West Bank, but there were no casualties.

Early Sunday, the army said it demolished nine houses in the West Bank around Al-Khalil, Nablus and Jenin that belonged to families of Palestinian activists who had carried out anti-Israel attacks.

In the Gaza Strip, an armed Palestinian was killed early Sunday on the northern coast near the Dugit settlement, an army spokesman said in a statement.

The Palestinian, wearing a wetsuit, was spotted by an army observation post as he left the sea and approached the security perimeter of the settlement, the statement said.

He was armed with a Kalashnikov assault rifle and grenades.

Subsequently the Zionist Army launched an incursion into a nearby Palestinian area, destroying a holiday camp run by the Palestinian Youth Ministry and another building, a Palestinian official said.

Some 50 tanks and other armored vehicles took part in the raid, the official said.