Driver killed after second digger rampage

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The driver of a construction vehicle rammed into cars and a city bus in Jerusalem today, wounding four people before he was shot dead, police said.

The attack was a chilling imitation of a similar incident early this month, when a Palestinian driver went on a rampage with his earthmoving vehicle on a busy Jerusalem street, running over vehicles and pedestrians, killing three and wounding dozens before an off-duty soldier shot and killed him.

The identity of the driver in today's attack was not immediately clear. There was no immediate claim of responsibility but Israeli police called it a "terror attack."

Minutes after the attack, the man's body was visible sprawled backward in the cabin of the yellow front loader.

Three cars were heavily damaged, including one that was overturned.

Police spokesman Micky Rosenfeld said police sealed off possible escape routes into predominantly Arab east Jerusalem and were searching for two suspects who fled the scene.

Israeli rescue services said they had evacuated one person whose leg was partially severed.

The attack took place in a busy part of downtown Jerusalem, several hundred meters from the luxury hotel where US presidential candidate Barack Obama is due to stay tonight as he starts a visit to Israel.

It came as Israeli President Shimon Peres hosted Palestinian President Mahmoud Abbas for talks in his official residence, saying the unprecedented visit should help dispel doubts about Israel's desire for peace.

Although the two men have met before, no Palestinian president had ever been inside Beit Hanasi, or President's House, in Jerusalem, where Israel's head of state routinely welcomes foreign dignitaries.

"I am full of confidence the problems will be resolved," Peres said after a red-carpet greeting for Abbas, who is engaged in statehood negotiations with Israeli Prime Minister Ehud Olmert that have shown little sign of progress.

"I feel both sides believe there is no alternative to peace," Peres said.