Responsibility for last night's bombing, which left at least six people seriously wounded, two of them critical, was claimed by Islamic Jihad, which was also responsible for the last suicide attack in Israel, in Tel Aviv on 25 February.
The Defence minister, Shaul Mofaz, met army and intelligence chiefs last night to consider the scale of Israel's military response and discuss a closure of the West Bank and Gaza to prevent further attacks.
The bomber, who was named as Ahmed Khalil, 18, appeared to have been on the point of the entering the mall. But for reasons that were not immediately clear, he detonated the bomb outside the shopping centre.
The claim by Islamic Jihad fulfils predictions by some international experts and senior Palestinian officials that the faction, which unlike Hamas has no electoral base, would go furthest in the run-up to Gaza disengagement in challenging, or at least testing, the ceasefire called in February.
Miriam Feinberg, the mayor of Netanya, said she had been on the way to the Maccabia Games, the Jewish Olympics many of whose events are being held in the city, when she "saw the attack in front of my eyes". She said the Games would continue regardless.
Doron Shafir, one of the first paramedics at the scene, said that he saw a woman whose clothes were on fire. "Another, her handbag was burning. We stepped on it to put it out. She was just sitting there. She did not know what was happening to her."
The mall was a few hundred yards from the Park Hotel, where the deadliest bombing of the Intifada, which killed 30 people in March 2002, took place.
It was reported that the bomber said in a video: "We reiterate our commitment to calm, but we have to retaliate for Israeli violations."
The Israeli government stepped up the pressure on the Palestinian President to do more to curb the militant factions. An official in the office of Prime Minister Ariel Sharon said: "Israel has done all it could to ease up Palestinian needs but the PA have not fulfilled obligations undertaken by them at Sharm al Sheikh [the Sharon-Abbas summit] and show no signs of doing so."
The Palestinian Authority condemned the attack. Palestinian leader Mahmoud Abbas called it "a crime against the Palestinian people". Saeb Erekat, the leading Palestinian negotiator, said: "We understand that those who carried out this attack want to sabotage the efforts being exerted to have a smooth and peaceful disengagement from Gaza and a revival of the peace process."
Police were investigating a connection between the bombing and an incident in Shave Shomron, a West Bank settlement. Police said that an Islamic Jihad militant attempted to drive a car bomb into the settlement but was arrested after the explosives detonated prematurely.
There were also exchanges of fire between Israeli forces and Hizbollah militants over the northern border with Lebanon last night. A senior army officer said that Hizbollah and Hamas would mount attacks as the Gaza disengagement approached in an attempt to underline that Israel was leaving the Strip "under fire."Reuse content