Israeli troops firing teargas and rubber bullets stormed four Palestinian banks on Wednesday in what security sources called a hunt for money sent from abroad to groups behind suicide bombings.
The sources said more than $3 million had been confiscated by late afternoon and the operation was still under way.
Palestinian medics said 42 people were injured, five critically, when stone-throwers confronted the biggest raid for months into Yasser Arafat's headquarters city of Ramallah.
Soldiers sealed off four banks for searches, including two branches of the Arab Bank. Israeli experts checked account details and documents were seized, witnesses said.
Palestinians rained stones on Israeli jeeps. Flames leapt from one of the vehicles as it was struck by a Molotov cocktail. Israeli troops rejected the accusation of Palestinian medics that it fired back some live rounds.
The Israeli security sources said the aim was to confiscate money from account-holders linked to militant factions that have killed hundreds of Israelis in suicide bombings during more than three years of conflict.
In particular, the raid was aimed at funds that Israel says have been sent from abroad to support its enemies.
"This raid is about cutting off the money trail to the militants," said one security source.
Arafat aide Tayeb Abdel-Rahim told Reuters: "This is provocation. They are asking for Palestinian retaliation. I do not see any justification."
The offices of an Islamic charity in the West Bank city of Tulkarm were also raided on Wednesday. Computers and documents were taken from there too.
Israeli troops have occasionally raided banks and Islamic charities during the conflict, saying their aim is to cut off financing for militants. But intelligence sources say it is next to impossible to shut down funding pipelines completely.
It costs only a few thousand dollars to carry out a suicide bombing, they say.