TEL AVIV: Israeli police said Friday they had shot dead a Palestinian gunman who had killed two people and wounded several others in Tel Aviv sparking an overnight manhunt, the latest in a surge of violence.

“We succeeded this morning... in eliminating the terrorist by exchange of fire,” police commissioner Yaakov Shabtai said in a statement.

The attacker had shot at revellers at a bar on the busy Dizengoff Street in the coastal city of Tel Aviv just after 9:00pm (1800 GMT) Thursday, triggering chaos as people fled in panic.

The Palestinian Islamist movement Hamas, which controls the Gaza Strip, and the Islamic Jihad, praised the attack.

Israel’s Shin Bet security agency named the assailant as Raad Hazem, 28, from Jenin in the north of the Israeli-occupied West Bank.

Special forces found the attacker “hiding near a mosque in Jaffa”, referring to the historically Arab quarter of Tel Aviv, according to the Shin Bet.

Israeli Prime Minister Naftali Bennett praised the security forces for their response.

“We maintain maximum alertness, within Tel Aviv and throughout the country, for fear of further incidents or imitation attacks,” Bennett said.

“Our war on murderous terrorism is long and hard. We will win.”

The Magen David Adom medical emergency service said 16 people had been taken to hospital, including “two dead, four seriously wounded,” and adding it remained “on high alert”.