Two days after being sworn in as prime minister, Benjamin Netanyahu issued a statement condemning the terror attack earlier Thursday in the West Bank settlement of Bat Ayin, in which an axe-wielding Palestinian killed a 13-year-old boy and left another boy, 7, moderately hurt.

The attacker apparently entered Bat Ayin, located between Jerusalem and the southern West Bank city of Hebron, unhindered. The religious settlers have refused to build a security fence around their community - standard practice in most settlements - saying it would be a sign of weakness.

The perpetrator was thought to have fled the scene of the attack and the Israel Defense Forces were searching for him well into the evening.

The prime minister was briefed on the attack and the subsequent manhunt during the course of the day. A statement issued by his office said that "Netanyahu exclaimed that he views the attack with the utmost gravity, and that he has instructed the defense and security forces to make every effort to speedily apprehend the murderer."

The IDF said Thursday night that they had obtained information on the identity of the attacker and that they expected to make an arrest within several hours.

IDF officers have been combing the West Bank village of Safa, which is adjacent to Bat Ayin, and have already made several arrests.

Earlier Thursday, Channel 2 television reported that the terrorist was a local Palestinian employee.

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The teenage victim, identified as Shlomo Nativ, sustained critical head wounds and later died while receiving medical care, Magen David Adom rescue personnel said. The 7-year-old victim was evacuated to Hadassah Ein Karem in Jerusalem for treatment.

Security guards at the settlement wounded the attacker before he fled, said Shaul Goldstein, a settler leader. "The security team here managed to shoot and hit the terrorist, but he managed to escape," he told Army Radio.

Israel Radio reported that the military wing of Islamic Jihad and a lesser-known faction identifying itself as the "Imad Mughniyeh Group" claimed joint responsibility for the attack.

The dead youth was the son of Haim and Revital Nativ, one of the original settlers who founded Bat Ayin, a community of secular-cum-religious Jews. Among the residents of Bat Ayin are followers of the Braslav Hassidic sect and many Chabad devotees.

Revital Nativ moved to Bat Ayin from Kibbutz Hatzor, and her husband is a long-time teacher. He runs a women's religious seminary in Jerusalem that has published children's books.

Immediately after the attack, a passerby confronted the terrorist and wrested the axe from his possession. The terrorist subsequently broke free from the passerby's grasp and fled the scene, Channel 2 reported.

Bat Ayin officials said residents in the settlement were instructed to remain in their homes. Security forces in the vicinity have also been advised to remain on high alert.

Bat Ayin, situated in the Etzion bloc south of Jerusalem near the Palestinian cities of Bethlehem and Hebron, is not ringed by a security fence, residents told Channel 2. This is apparently for ideological reasons.

This was the first attack in the Etzion Bloc since January 2008, when two students were wounded after two terrorists armed with knives broke into their yeshiva.

'He tried to stab me. I kicked him, he kicked me.'

The Palestinian terrorist was immediately confronted by a passerby who forcibly removed the weapon from his hand.

"He tried to stab me. I kicked him, he kicked me," the settler, who gave his name only as Avinoam, told Channel 10.

"I saw the seven-year-old boy running, the axe-wielding terrorist was running after him," Avinoam said. "I ran toward the terrorist and he tried to raise the axe over me with the aim of killing me."

"I caught his hand and struggled with him, while calling other people to come and help. First I caught the hand holding the axe so that he couldn't kill me, I somehow managed to grab the axe. He succeeded in escaping and I shouted to somebody to run after him."

"At first I thought he was a laborer and that this wasn't a serious incident, but then I realized it was an Arab," Avinoam said.

"I wouldn't have a clue if this was somebody who was employed here in an illegal manner, because we don't employ Arabs. He was not dressed-up (for work), he looked normal. He had a longing for murder in his eyes.'

"The struggle lasted several minutes," Avinoam said, adding that the terrorist was saying something along the lines of "I will kill, I will kill" while the two were struggling.