American Marconi Wireless News - Israeli PM gives security forces free rein to act after attack

"There are not and will not be limits for this war," Prime Minister Naftali Bennett said, speaking hours after the attack in Tel Aviv.

"We are granting full freedom of action to the army, the Shin Bet (the domestic security agency) and all security forces in order to defeat the terror," he added, in a public address in the Israeli coastal city.

The Palestinian Islamist movement Hamas, which controls the Gaza Strip, and the Islamic Jihad group praised the attack but have stopped short of claiming responsibility.

Earlier Friday, Israeli police said they had shot dead a Palestinian gunman who killed two Israeli men and wounded over a dozen others when he opened fire on a street of busy bars and restaurants crowded on a Thursday evening.

Some 1,000 heavily armed police and army troops fanned out across Tel Aviv hunting for the perpetrator for hours, as locals hid in restaurant kitchens and in their homes.

Israeli Defence Minister Benny Gantz, speaking alongside Bennett, said officers had made "around 200 arrests", adding that "if necessary there will be thousands."

- Engagement party becomes wake -

The two Israeli men killed were named as Tomer Morad and Eytam Magini, both 27 and childhood friends from the city of Kfar Saba, the mayor Rafi Saar said, who called them "our best sons."

Magini was due to celebrate his engagement on Friday evening, Lia Arad, the mother of his fiancee, told Israeli public TV.

"They were supposed to celebrate their engagement party tonight, Eytam's cousins organised it in this house where we are now sitting in mourning," Arad said.

Morad was an avid fan of the Hapoel Tel Aviv Basketball Club, which said in a note of condolence it sent "a warm and loving hug". The two friends are to be buried Sunday.

Special forces confronted the attacker in the old city of Jaffa, the historic Arab district of Tel Aviv, "eliminating the terrorist by exchange of fire", police commissioner Yaakov Shabtai said.

Israel's Shin Bet agency named the assailant as Raad Hazem, 28, from Jenin in the north of the Israeli-occupied West Bank, where last week Israeli forces killed three in a raid.

Palestinian Authority president Mahmud Abbas condemned the attack, saying "the killing of Palestinian and Israeli civilians only leads to a further deterioration of the situation," the official Wafa news agency reported.

US Secretary of State Antony Blinken also criticised the "terrorist attack" and said Washington stood with Israel "in the face of senseless terrorism and violence."

A total of 13 people have been killed in attacks in Israel since March 22, including some carried out by assailants linked to or inspired by the Islamic State group.

Over the same period, at least nine Palestinians have been killed, including assailants.

Fathi Hazem, the father of the attacker, struck a defiant tone as he spoke to hundreds of well-wishers at the family home in Jenin, saying the Palestinians people were looking for "freedom and independence".

On Thursday night, Islamic Jihad "welcomed" the attack as a "natural response" to Israel's "crimes".

The Hamas militant Islamist group praised what it called a "heroic operation", while Lebanon's Iran-backed Hezbollah movement said it was a "victorious" attack.

- 'A nightmare' -

Tel Aviv's Ichilov Hospital, which was treating eight people injured in the shooting, said Friday morning that one of the victims was "in critical condition with an immediate risk to his life".

Eight others with less severe injuries had been treated at other hospitals and released.

On Friday, outside the bar where the attack took place, mourners lit candles and left flowers.

Noa Roberts, 21, who works at a bar across the street from the attack, said she heard dozens of bullets as terrified customers and staff raced to shelter and hid for two hours.

"We all ran in the back, it was so scary," Roberts said. "You hear real shooting, it was like a nightmare."

The attack came the night before the first Friday prayers in the Muslim fasting month of Ramadan.

On Friday, large numbers of Israeli security officers manned the Qalandia checkpoint, where thousands crossed from the West Bank to pray at the Al-Aqsa Mosque in annexed east Jerusalem, the third-holiest site in Islam.

Last year, nightly demonstrations in Jerusalem and the Al-Aqsa compound escalated into 11 days of war between Israel and Hamas.

Y.Kobayashi--AMWN