Referring to the Passover eve attack, in which one Israeli was killed and his wife and son were wounded, Netanyahu said: "Last night this incitement was translated into the murder of a father who was traveling with his family to celebrate the first night of Passover.
"The incitement of the Palestinian Authority continues in that it has yet to see fit to condemn this abominable and reprehensible act."
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The attack almost certainly complicates US attempts to salvage the troubled Israeli-Palestinian peace talks.
Two decades of Israeli-Palestinian negotiations have failed to settle the conflict, and the latest US mediation attempt, launched last year by Secretary of State John Kerry, also seems on the verge of collapse.
The Palestinians have been demanding Israel release a promised batch of prisoners, many of whom were involved in similar attacks as the one on Passover. Bayit Yehudi, a nationalistic party in Netanyahu's coalition, has threatened to quit it if prisoners are freed.
Despite their disagreement on the release of prisoners, Economy Minister and Bayit Yehudi Chairman Naftali Bennett echoed Netanyahu's condemnation of the Abbas administration: "The Palestinian Authority bankrolls Jew killers with one hand and extorts Israel to release them with the other. They're committed to terror, not peace."
Attack 'brought back life to path of resistance'The prime minister of the Hamas-ruled Gaza Strip on Tuesday praised the attack outside Hebron.
Speaking in Gaza, Ismail Haniyeh said the attack outside the city of Hebron "brought back life to the path of resistance" against Israel and warned of more attacks in the territory. No one claimed responsibility for the attack, the latest incident to threaten peace talks with the Palestinians.
"We tell the enemy and anyone who thinks he is able to tame the West Bank... the West Bank will be the future point of our struggle with the enemy," Haniyeh said.
Attacks like Monday's were common in the West Bank during Israeli-Palestinian fighting last decade, but the level of violence dropped significantly in recent years.
Still, Israeli human rights group B'Tselem said Palestinians have killed 17 Israeli civilians in the West Bank since 2009, not counting Monday's fatality. Spokeswoman Sarit Michaeli said 76 Palestinian noncombatants were killed during that period in the same territory.
She said her group is critical of the Palestinian deaths and has called for investigations by the military, but said they were not comparable to the Israeli ones as Palestinian militants purposely targeted civilians while Palestinian civilians died during violent altercations and arrest raids against militants.
"The argument that there is justification for killing settlers as part of the struggle against Israeli occupation is both legally and morally groundless," Michaeli said, adding that all civilians must be protected.
In 2002, at the height of Israeli-Palestinian fighting, a Palestinian suicide bomber blew himself up at a Passover Seder in a hotel, killing 30 people and wounding over 100.
The Associated Press contributed to this report.