JERUSALEM, Jan. 21 — The Israeli Army used bulldozers to flatten dozens of shops today in one of the only thriving Palestinian commercial centers near the West Bank boundary, saying that the store owners lacked permits.

Across Israel´s northern border, Hezbollah guerrillas fired mortar rounds and antitank rockets at Israeli Army positions, prompting return fire from tanks, artillery and helicopters, as well as stern warnings from Israeli officials.

It was the first attack across the border in more than four months against the Israeli positions, on Mount Dov. Israeli officials have recently expressed the concern that Hezbollah would step up attacks along the northern border in hopes of impeding American war plans by raising the specter of a wider conflict.

No casualties were reported in the attack today. But an Israeli Army spokesman said, "The Lebanese government and its Syrian guardian are responsible for attempting to escalate the situation in the Mount Dov sector."

The Palestinian commercial center, in the village of Nazlat Issa, lies just east of the West Bank boundary and is virtually indistinguishable from a neighboring Israeli Arab town to the west. Until today, one could buy yellow peppers, paint, freshly slaughtered lamb, coffee and tricycles there.

The fortunes of Nazlat Issa have flowed and now ebbed as the relations between Israelis and Palestinians have steadily deteriorated over more than two years of conflict.

Israel says that suicide bombers have frequently crossed the West Bank boundary in that area to strike against Israelis in the north and center of the country.

Just today, the Israeli police said they had discovered a car with more than 600 pounds of explosives near the Israeli Arab village of Umm el Fahm, a few miles north of Nazlat Issa. Three men were said to have escaped from the car, which the police later blew up.

Before the conflict began in September 2000, there was a bustling commercial center just east of Nazlat Issa, in the Palestinian village of Baqa al Sharqiya. Israelis — Jews as well as Arabs — once crossed into the West Bank to shop there, avoiding Israel´s value- added tax.

When the conflict began, Israel set up a checkpoint on the western edge of Baqa al Sharqiya, cutting off the shops from their wealthiest customers. Some shop owners slipped around the checkpoint and created a ramshackle mall of corrugated metal sheds in neighboring Nazlat Issa, which Israelis could still freely visit.

In the fall of 2001, Israel began imposing new travel restrictions on Palestinians in the area, as part of what it called a buffer zone. Israeli soldiers stopped Palestinian workers and demanded travel documents, which Palestinians said were very hard to obtain, indicating that they had permission to be moving about.

As early as October 2001, some shop owners received notices from the army that their stores were due to be demolished. But workers continued to walk and even drive around the checkpoint on rutted roads, and business continued, until today.

Dozens of protesters threw stones today at the Israeli troops, who responded with tear gas and rubber-coated bullets, The Associated Press reported.

Israel is now bolstering its buffer zone with a barrier fence, which is being built mostly through Palestinian fields near the West Bank boundary. The army recently posted maps in the area showing the planned path of the fence. The map indicates that the fence will pass along the eastern edge of Nazlat Issa, cutting it off from the rest of the West Bank. (Copyright 2003 The New York Times Company 01/22/03)