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At least four people were killed and 38 others were wounded when a suicide bomber blew himself up Friday night outside a discotheque on a Tel Aviv promenade, the Ha'aretz Daily reported.
The death toll is expected to rise as some of the wounded were in serious or critical condition, medics said. Altogether 17 people have been hospitalized.
The Palestinian militant group Islamic Jihad has claimed responsibility for the attack. Militants in the Al Aqsa Martyrs' Brigades said the Lebanese guerrilla group Hizbollah was also involved in the attack.
The suicide bomber apparently blew himself up at around 11:15 p.m. (2115 GMT) outside the "Stage" club, on the corner of Herbert Samuel and Yonah Hanavi streets in the city, the report said.
Police cordoned off the roads afterwards, and have asked the public to refrain from arriving at the area.
Security officials are pursuing two suspects, after witnesses reported seeing two men fleeing the explosion site.
The terrorists may have come from the northern West Bank, and may intend to return to the area, police said.
The area surrounding the site of the explosion was completely devastated in the blast with street signs broken and glass shattered. A next door kiosk was almost completely destroyed.
An initial investigation shows the security guard at the night club spotted two men approaching the area and followed them before one of the men escaped and the second blew himself up.
Speaking at the Ichilov Hospital where the casualties were receiving treatment, Tel Aviv Mayor Ron Huldai said "those who believe we have reached peace are wrong."
"We are still in a process and there are a lot of people who are want to harm it. We will have to wait some more for security and peace," he said.
"We found young people lying on top of each other, most of them moderately to seriously wounded," said Alon Kotler, a paramedic who treated several of the wounded.
According to Kotler, the type of wounds indicate that the suicide bomber blew himself up in the midst of the partygoers.
The manager of the club told Channel 2 TV station that the club had opened only moments before the blast in a queue of some 30 people waiting to enter.
There were four security guards on the door, he said, adding that the club was usually very busy on Friday nights.
He said that he had been inside at the time of the explosion, and had heard a "large boom."
The explosion marks the end to a period of four months of relative calm in Israel and the Palestinian territories.
Two weeks ago, Prime Minister Ariel Sharon and Palestinian leader Mahmoud Abbas declared an end to hostilities between the two sides, after more than four years of violence.
"The Palestinian Authority's attempt to reach arrangements for the prevention of terror have failed, just as Israel said they would. Israel has always maintained that it is impossible to maintain a dialogue with (militants)," David Baker, an official in Sharon's office, said.
A senior Israeli foreign ministry official said there will be no progress in the region without dismantling terror groups.
Chief Palestinian negotiator Saeb Erekat condemned the Tel Avivsuicide bombing "in the strongest possible terms."
"Whoever is behind, it is seriously attempting to sabotage all efforts being exerted to revive the peace process and should not be allowed to succeed," he said.
(Xinhua News Agency February 26, 2005)
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