Israeli soldiers fired at Palestinians suspected of preparing to attack Israeli cars in the occupied West Bank on Thursday, the military said, and Palestinian officials said a Palestinian teenager was killed.

A military spokeswoman said members of a "terrorist squad" were hit by the gunfire but she had no details on their condition.

Palestinian health and municipal officials said Mohammad Damer Hamdan, 16, was killed by Israeli forces and two other Palestinians were wounded. The Hamas Islamist militant group issued a statement mourning his death.

Imad Zahran, chairman of the local council of Hamdan's village, said the three youths were near a road used by Jewish settlers when the soldiers shot them.

The military spokeswoman said the soldiers opened fire after spotting Palestinians carrying flammable material and preparing tyres which they planned to ignite and use to attack passing Israeli vehicles.

Zahran said two of the Palestinians shot by the troops were treated in Palestinian hospitals and that the military, which had taken Hamdan away, later informed him that he had died of his wounds. A Palestinian health official also said Hamdan was killed.

The military spokeswoman said the shooting occurred at a spot where similar attacks against Israeli vehicles have been carried out in the past.

Palestinians regard Jewish settlements, seen as illegal by most countries in the world, as a bid by Israel to exert permanent control over the West Bank and destroy their aspirations for statehood.

Israel has pledged to annex parts of the West Bank but suspended implementation at the United States' request as part of a normalisation deal with the United Arab Emirates last week.​ Israel captured the West Bank in the 1967 Middle East War. Palestinians seek the territory for a future state that would include the Gaza Strip and East Jerusalem.