Soldiers fired rubber-coated steel pellets and tear gas at the crowd, and a 12-year-old Palestinian boy suffered a serious head injury, hospital officials said.
Israel's Supreme Court ruled Wednesday that construction of a stretch of barrier northwest of Jerusalem could not resume until after the military responds to allegations that the route creates unnecessary hardship for Palestinians.
The army was given a week to respond, but the freeze is expected to remain in effect until the court reconvenes. No date has been set for the next hearing, court officials said.
The order affects an area around eight Palestinian villages northwest of Jerusalem near the invisible line separating Israel from the West Bank.
Opponents say the planned route of the barrier will severely disrupt the lives of 30,000 Palestinians by virtually imprisoning them in their villages and cutting them off from Jerusalem and the West Bank city of Ramallah.
Israel says it needs the barrier of razor wire, concrete walls and trenches to prevent Palestinian suicide bombers from entering its towns and cities.
Meanwhile, a 27-year-old Palestinian man in Gaza died of shrapnel wounds suffered in an Israeli missile strike Wednesday, Palestinian medical workers said.
Adli Abu Taha was the fifth Palestinian fatality from a pair of helicopter strikes in the Rafah refugee camp. The medical workers said Abu Taha was a civilian bystander.
Israel launched a new offensive into the Gaza Strip (news - web sites) this week after suicide bombings Sunday that killed 10 Israelis in the Ashdod seaport. Security officials have also said they want to strike hard at militants ahead of a possible Israeli withdrawal from Gaza.
Prime Minister Ariel Sharon (news - web sites) has said if peace talks remain stalled, he might order a pullout from Gaza and impose a boundary in the West Bank. Violence in Gaza has been increasing, with both sides intent on portraying a pullout as a victory.
Palestinian Prime Minister Ahmed Qureia said Thursday that Israel must withdraw quickly and peacefully.
"We don't want to see the withdrawal as talk, and on the ground they are destroying Gaza and killing the people in Gaza," he said.
Top security officials recommended to Sharon on Wednesday that the withdrawal from the Gaza Strip be complete, except for three settlements in a northern section and a strip along the border with Egypt, the Haaretz daily reported.
Most of Wednesday's military activity occurred in Rafah. Ground forces raided the camp, located on the Egyptian border, to uncover tunnels used by weapons smugglers. Palestinians said the troops demolished nine homes before pulling out.
Since the start of the operations, seven Palestinians have been killed and more than 30 others have been wounded. No Israeli casualties have been reported.
The Ashdod bombing has alarmed Israeli security officials. It was the first successful strike on a strategic target in Israel, and it was also the first suicide bombing in more than three years of fighting to originate in Gaza.
Security officials said the two bombers might have hidden in a cargo container that entered Israel through a crossing from Gaza.
Investigators' suspicions were raised after they discovered a container with a hidden compartment Wednesday at the port. The compartment contained five grenades, mattresses, drinking water and scraps of food, the security officials said.
The Palestinians do not have their own port in Gaza and must use the Ashdod port to ship items overseas.
Several containers with products from Gaza pass through the Karni checkpoint into Israel every day. The containers go through rigorous Israeli security checks at the crossings, where they are usually transferred from one truck to another.
The Haaretz daily said the bombers' container had slipped by a civilian inspector who failed to notice the double wall.
The Supreme Court order over the separation barrier followed a protest in the area last month in which Israeli troops killed two Palestinian protesters. About 30 residents of the nearby Israeli town of Mevasseret Zion joined the challenge.
Mohammed Dahla, a lawyer for the barrier opponents, submitted a report by former Israeli military officials claiming the planned route goes far beyond security considerations and says a less intrusive route would be equally effective.
Defense Ministry and government officials did not immediately comment.
"I think it's a victory," Dahla said. "I think the Supreme Court in a way has started not to believe the story that is being told by the army. ... The wall is not only about security."
The barrier faces a series of legal challenges in the Supreme Court and the International Court of Justice in The Hague (news - web sites), Netherlands.
