The blast, the first of its kind in Jerusalem for seven years, tore a hole in the side of a bus, killing a 59-year-old woman and injuring more than 30, some critically, as they waited to board.
Within moments of the explosion, ambulances and police, their sirens wailing, were racing to the scene, where shattered glass and debris were strewn over blood-stained pavements. Medics treated dozens for blast injuries, including shrapnel and glass wounds.
"It was very hard [today], even though we know how to treat people like this," said Yuval Yirmiahu, a paramedic. "There was a lot of pressure, people were yelling, there was a smell of smoke and burning."
Police said the small bomb had been concealed in a shopping bag on the pavement next to the bus stop, and said it weighed 1-2kg. As of last night, nobody had claimed responsibility, but the authorities blamed Palestinian militants and vowed retaliation.
Benjamin Netanyahu, the Israeli prime minister promised retaliation. "We will react aggressively, responsibly and wisely" to attacks, he said.
The bombing comes amid Palestinian frustration over stagnated peace talks and a ratcheting up of tensions between Israel and Palestinian militants on the Gaza border, which many fear could lead to another conflict.
For many, it was a painful reminder of the years of the Second Intifada, the mass Palestinian uprising when bombings targeting mainly restaurants and buses were a regular occurrence in Jerusalem, as Israeli military operations killed thousands in the West Bank and Gaza. The last suicide bombing in Jerusalem was in February 2004.
One bypasser described the scene as he ran to help: "I saw a boy running towards me with shrapnel wounds all over his body. He was injured in his arms and legs. He sat down on the ground and then laid down," Yonatan Shakiba told Israeli news portal, Ynet.
"It was chaos... I looked around and saw many victims and a lot of blood. Rescue forces were all over the area, searching, opening and closing doors. It takes us back to trying times."
Palestinian Prime Minister Salaam Fayyad, a moderate who embarked on an ambitious programme two years ago to build a Palestinian state from the bottom up through peaceful means, immediately condemned the attack.
Jerusalem mayor Nir Barkat said life would go on as normal and a marathon scheduled for Friday would take place. "We will show the terrorists we are not terrorised," he said.
The attack, which took place within reach of several religious communities, prompted extraordinary street scenes, with young ultraorthodox students shouting, "Death to the Arabs!" One religious student, wearing the traditional black garb, tried to distance himself, shouting: "Retaliation doesn't have to be indiscriminate, there's no reason just to bomb everything." But feelings ran high, with many urging retaliation. Only two weeks ago, intruders broke into the West Bank settlement of Itamar, stabbing to death five members of a Jewish family.
"There's no difference between Itamar, Ashkelon [an Israeli town near Gaza] and Jerusalem. We are all under attack," said Danny Danon, a politician from Israel's far right. "It's time to take action. We should take military action to fight terror, mainly within Gaza."
Tensions between Israel and Palestinian militants have risen in the past week after an Israeli air strike killed two members of Islamist movement Hamas, which had largely stuck to a ceasefire although there had been sporadic attacks by other Islamist factions.
Hamas, which governs Gaza, responded with mortar fire, prompting an even heavier response from Israel, which mistakenly killed several Palestinian civilians, including three members of one family, in shelling and air strikes on Tuesday. In retaliation, militants fired rockets at Beersheba, a southern city, yesterday as Israeli commentators warned that Israel could be drawn into another 'Cast Lead', the operation in Gaza two years ago that left 1,400 Palestinians and 13 Israelis dead.
"We will not tolerate the harming of Israeli citizens, not in the south and not in Jerusalem," Israel's Defence Minister Ehud Barak stated. "Hamas is responsible for the firing of rockets toward Beersheva today and this responsibility has a price."
