At least 10 people are thought to have been injured in a bomb blast on a bus in the Israeli city of Tel Aviv.
The explosion took place across from the military headquarters - on the eighth day of an Israeli offensive against Palestinian militants in Gaza.
Ofir Gendelman, a spokesman for Israeli Prime Minister Benjamin Netanyahu, immediately condemned the explosion as a "terrorist attack".
Authorities are investigating whether an explosive was planted on the vehicle or whether the attack was carried out by a suicide bomber.
Emergency services tend to the injured as crowds gather after the blast Unconfirmed reports from Israel said police are holding a man caught running away from the scene moments before the bombing, and are looking for a woman who was on the bus before the explosion.
The blast happened at around noon in one of the coastal city's busiest hubs, near the Tel Aviv Museum and an entrance to the Kirya, Israel's national defence headquarters.
Television footage showed pictures of a smoke-filled bus, charred inside with its windows blown out.
Israel's ambulance service said three of the wounded were in a moderate-to-serious condition.
Hamas spokesman Sami Abu Zuhri praised the bombing, but stopped short of claiming responsibility.
"Hamas blesses the attack in Tel Aviv and sees it as a natural response to the Israeli massacres ... in Gaza," he said.
"Palestinian factions will resort to all means in order to protect our Palestinian civilians in the absence of a world effort to stop the Israeli aggression," he added.
Israeli medics wheel a wounded man away from the scene Israel has been locked in a deadly week-long confrontation with Palestinian militants in Gaza after an Egypt-brokered truce fell through.
The attack comes as diplomats, including US Secretary of State Hillary Clinton, are in the region for talks to try to broker a ceasefire.
More than 130 Palestinians and five Israelis have been killed in the latest conflict.
British Foreign Secretary William Hague said the bus explosion was of "deep concern".
"Terrorists must not be allowed to set the agenda," he said.
"This shocking violence further underlines the urgent need for an immediate de-escalation of violence and a full ceasefire."
Hamas militants have fired at least four rockets at Tel Aviv in the past week, but none have resulted in direct hits or any casualties.
The last time the city was hit by a serious bomb blast was in April 2006, when a Palestinian suicide bomber killed 11 people at a sandwich stand near the city's old central bus station.
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