By Ali Sawafta and Sinan Abu MayzerTAL, West Bank, July 24 (Reuters) - Four Palestinians and one Israeli were killed near a Palestinian village on Friday in a confrontation that added to a growing toll over recent weeks as Israeli settler violence has intensified against Palestinians in the occupied West Bank.The incident near the village of Tal, southwest of Nablus, took place as settler attacks on Palestinian villages have increased sharply since the start of the year, according to figures from the United Nations.Israel's military said it had received reports that Israeli civilians who were hiking in the area had been attacked near the village, in the so-called Area A of the West Bank, an area under Palestinian Authority civil and security control that Israelis are officially prohibited from entering. It said a Palestinian man took a weapon from Israeli security personnel from the nearby settlement of Havat Gilad and opened fire, wounding several Israelis before being killed. It said four Palestinians had been killed.Local Palestinian officials said a large group of Israeli settlers had tried to break into two houses and were then confronted by villagers.ISRAELI MILITARY PREPARES FOR MAJOR OPERATIONOn Friday, Israeli troops set up roadblocks in the area around Tal and Nablus and said they were pursuing individuals involved in the incident. The military said it was preparing for "extensive counterterrorism operational activity in the sector" and had cancelled leave.Hardline Finance Minister Bezalel Smotrich said nearby Palestinian villages should be cleared of their inhabitants and new settlements established nearby to establish security."This is our appropriate Zionist answer to terrorists and terrorism, and to the desire to harm our grip on the areas of our country," he said in a statement.Israeli Prime Minister Benjamin Netanyahu said he had conducted a security assessment into the incident, along with the defense minister and the military's chief of staff.Three months before Israelis go to the polls, Netanyahu's pro-settler government has stepped up preparations to expand settlements in the West Bank, which Israel has occupied since the 1967 Middle East war. Palestinians view it as part of their state along with Gaza, with East Jerusalem as its capital.In a separate incident on Friday, the Palestinian Authority foreign ministry said settlers had attacked a village near the city of Qalqilya, wounding two people and setting fire to trees and cars. The Israeli military was not immediately available for comment.According to figures from the Palestinian Authority, 87 Palestinians have been killed in the West Bank so far this year, including 21 killed by Israeli settlers. United Nations figures indicate some 850 Palestinians have been wounded in the context of attacks by Israeli settlers since the start of the year.Essam Saifi, a local leader in the Palestinian Fatah party from Tal, told Reuters in a phone call that about 25 to 30 settlers initially attacked the eastern area of Tal and tried to break into two houses there.When residents came out to confront them, he said the settlers opened fire before leaving.Half an hour later, he said they returned and attacked the western part of the town, leading to a chaotic shootout that also involved the Israeli military. (Ali Sawafta reported from Ramallah; additional reporting by Emily Rose in Jerusalem and Eman Abouhassira and Ahmed Elimam; Editing by James Mackenzie and Philippa Fletcher)