Israeli forces set up roadblocks and deployed around a major Palestinian city Wednesday in a manhunt for attackers who shot dead an Israeli settler, sparking calls at his funeral for "revenge".

Raziel Shevah, a 35-year-old rabbi, was killed late Tuesday while driving near the wildcat settlement where he lived, Havat Gilad near the northern city of Nablus in the occupied West Bank.

Some 22 gunshots were found in his car, Israel's army radio reported. The gunshots reportedly came from a passing vehicle.

"Entrances and exits to and from the villages surrounding Nablus will be possible only after security checks," the military said in a statement.

"The review of the incident is ongoing. Based on situation assessments, it was decided to reinforce the area with additional forces."

Soldiers checked identification papers and searched cars at checkpoints around Nablus, causing long back-ups. No arrests had been reported.

The area frequently sees tensions between hardline Israeli settlers and Palestinians.

Shevah laid to rest at the wildcat settlement on Wednesday -- the first person to be buried there at the wish of his family.

Hundreds of people attended the funeral, which included cries for "revenge" from youths in the crowd during a speech by Education Minister Naftali Bennett from the far-right Jewish Home party.

Bennett responded by saying the only revenge should be in building more settlements in the West Bank.

- Hardline settlement -

Israeli officials strongly denounced the attack, including those calling for punitive measures against Palestinians, such as the demolition of the homes of the attackers.

Hamas, the Islamist movement that runs the Gaza Strip, welcomed the shooting.

Defence Minister Avigdor Lieberman said he ordered his staff to look into how Havat Gilad could be legalised as a settlement.

All Israeli settlements in the occupied West Bank are seen as illegal under international law and major obstacles to peace as they are built on land the Palestinians see as part of their future state.

Israel however differentiates between settlements it has approved and those it has not.

Those without approval are referred to as outposts and are typically populated by hardline religious nationalists who see the entire West Bank as part of Israel.

Past attempts by Israeli authorities to evacuate Havat Gilad have led to clashes with settlers there. Some 50 families currently live in the outpost.

Around 400,000 Israeli settlers live in the West Bank among some 2.6 million Palestinians.

Sporadic unrest has occurred since US President Donald Trump provoked Palestinian anger by recognising Jerusalem as Israel's capital on December 6.

Fourteen Palestinians have been killed since then, with most of them shot dead in clashes with Israeli forces. Shevah is the first Israeli killed since then.

It was unclear if Tuesday's shooting had any link to Trump's announcement.

- 'Look no further' -

Israeli Prime Minister Benjamin Netanyahu accused the Palestinian authorities of "funding and incentivising murder", insisting they "communicate to their people: kill an Israeli and be rich".

US ambassador to Israel David Friedman, a supporter of West Bank settlements, said on Twitter: "An Israeli father of six was killed last night in cold blood by Palestinian terrorists."

"Hamas praises the killers and PA (Palestinian Authority) laws will provide them financial rewards. Look no further to why there is no peace."

The Palestinian foreign ministry accused Friedman of a "prejudiced" stance on the conflict, saying he has yet to criticise Israel for settlement building or its 50-year occupation of the West Bank.

Israeli officials have regularly called for a halt to payments of families of Palestinian prisoners, including those convicted of attacks, or those killed while carrying out attacks.

They say the payments encourage further violence.

But for Palestinians, such payments are a key source of income for families who have in many cases lost their main breadwinner.

The Palestinians also see them as symbolically important after decades of yearning for elusive statehood and struggle against Israel's occupation.

Israel's defence ministry claimed the Palestinian Authority had paid out 1.2 billion shekels (300 million euros/$350 million), or seven percent of the PA's annual budget, in 2017 as part of the policy.

According to the ministry, a Palestinian sentenced from three to five years in prison receives $600 per month, while those serving 20 to 35 years receive $2,900.

The ministry said it was pursuing legislation that would allow Israel to subtract the amount of those payments from the tax revenue it collects on behalf of the PA and later hands over to it.

Source: AFP