Residents of the Palestinian Burqa village said Israeli settlers entered their village on Friday night, threw rocks and set fire to cars.
The Palestinian Health Ministry said a 19-year-old Qusai Matan died in the incident.
A statement from the Israeli military said an initial investigation has found that clashes began when Israelis arrived to herd sheep near the village and Palestinians from the town came to move them away, at which point "verbal confrontations ensued which were followed by the hurling of rocks by both sides, and the firing of fireworks by Palestinians".
"During the confrontation, Israeli civilians shot toward the Palestinians," the statement said.
"As a result of the confrontation, a Palestinian was killed, four others were injured and a Palestinian vehicle was found burnt."
Israeli media reported that one of the arrested settlers used to work as an aide, who remained unnamed, for a lawmaker of the ultranationalist Israeli "Jewish Power" party which is in Prime Minister Benjamin Netanyahu's coalition in the Israeli parliament.
It includes Itamar Ben-Gvir, a pro-settlement firebrand known for hardline positions against Palestinians.
The party could not be reached for comment.
The United States has expressed concern over growing attacks by Jewish settlers on Palestinian villages in the West Bank, where violence has worsened since last year with stepped-up Israeli raids amid Palestinian street attacks on Israelis.
A suspected Palestinian gunman opened fire in Tel Aviv on Saturday and a security guard suffered life-threatening injuries, medics said, according to media reports.
The guard was resuscitated and taken to hospital.
Police said they shot the perpetrator who later died in hospital.
The attacker was a Palestinian from Jenin in the West Bank.
The 27-year-old was carrying a suicide note, police chief Kobi Shabtai told the Times of Israel newspaper, at the scene of the attack.
"He came in order to become a martyr," Shabtai said.
The incident occurred when police officers "noticed an individual who aroused their suspicions and prompting them to approach him. At that stage, the terrorist opened fire towards the inspectors, severely injuring one of them," the police said in an earlier statement.
"Another municipal inspector responded swiftly and managed to neutralise the terrorist."
A leading member of Hamas, the Palestinian organisation that rules the Gaza Strip, called the attack "a heroic act and a natural reaction to the killing of two young men in the West Bank on Friday".
Israeli settlers shot dead a 19-year-old Palestinian man and injured others near Ramallah on Friday.
The settlers had reportedly entered the Palestinian village of Burka.
They also set fire to two vehicles there, WAFA, the Palestinian news agency, reported.
Two suspected perpetrators were arrested, according to the police.
with AP and DPA
18°C