Dozens of Israeli settlers set homes and cars ablaze in the northern town of Huwara overnight Sunday, after a day of Israeli-Palestinian talks in neighbouring Jordan aimed at quelling a surge of violence in the Palestinian territory.

More than 350 Palestinians were injured, most suffering from tear gas inhalation, the Palestinian Red Crescent Society said.

The Palestinian health ministry said Sameh Aqtash, 37, was shot dead during an attack by settlers on the nearby village of Zaatara.

The violence came hours after two Israeli settlers -- brothers Yagel Yaniv, 20, and Hallel Yaniv, 22 -- were shot dead as they drove through Huwara.

On Monday, an AFP photographer saw damaged homes blackened by fire, long lines of charred cars, burned trees and smashed windows in the town.

"They burned the cars and the houses and destroyed everything," Huwara resident Diaa Odeh said.

"Whenever we started to push the settlers back, the army was firing tear gas at us," added the 25-year-old.

Wajeh Odeh, a member of the town's municipality, said 30 houses were burned and damaged, with more than 100 cars torched.

An Israeli occupation army official said 300 to 400 people went to the area for "revenge" and described the violence as "actions of terror", without elaborating.

"(We are) trying to de-escalate and keep the two sides apart in this very, very hard situation that we are in," the official told journalists.

Abdel Moneim Aqtash said he and his brother were standing outside a blacksmith's workshop when Israeli settlers attacked them.

"They left the area and then came back with the occupation (Israeli) army... The army shot my brother, not the settlers," he told AFP.

The military told AFP that Aqtash "was not shot by an Israeli soldier".

'We want security'

Yoav Gallant, defence minister in Israeli Prime Minister Benjamin Netanyahu's new right-wing coalition government, said he expected "difficult days ahead" and had ordered troops to be reinforced.

"With this being said, I call on everyone to restore calm... We cannot allow a situation in which citizens take the law into their (own) hands," he said.

The search for the gunmen who fired on the two brothers was ongoing, the military official said.

In Burin, close to Huwara, village council head Ibrahim Omran said residents experienced "a real battlefield".

"Even the sheep were not spared from the brutality of the extremist settlers," he told AFP, explaining that two sheep were stabbed to death, while homes, cars and a school room were set ablaze.

The West Bank is home to about 2.9 million Palestinians as well as an estimated 475,000 Jewish settlers, who live in state-approved settlements considered illegal under international law.

Bezalel Smotrich, Israel's finance minister and an extreme-right settler who lives near Nablus, was among hundreds attending the Israelis' funeral in Jerusalem.

"We will continue to build on our land, new neighbourhoods and communities," he said, referring to West Bank settlements.

"We thank our soldiers who fight against our enemies," he added at the funeral.

The coffins were draped in the Israeli flag and cries of mourners drowned out a rabbi reciting prayers, an AFP correspondent said.

'A pogrom'

Palestinian president Mahmud Abbas's office accused Israel of "protecting terrorist acts perpetrated by settlers" in the West Bank.

Hamas, the militant group which rules Gaza, called on Palestinians "to defend the city of Nablus and repel the settlers' terrorism".

Israeli rights groups BTselem and Peace Now said the Huwara attack amounted to "a pogrom".

Sunday's violence came the same day as talks in Jordan where Israeli and Palestinian officials pledged to work to prevent further violence.

In a statement, both sides reaffirmed "the need to commit to de-escalation on the ground".

Tor Wennesland, the United Nations Middle East peace envoy, said Monday he was "gravely concerned by the deteriorating security situation" in the West Bank, which Israel has occupied since the 1967 Six-Day War.

Since the start of this year, the Israeli-Palestinian conflict has claimed the lives of 63 Palestinian adults and children, including militants and civilians.

The violence follows the deadliest year for Palestinians in the West Bank since at least 2005.