The three Israeli teenagers who were abducted earlier this month in the West Bank have been found dead.
Prime Minister Benjamin Netanyahu said Hamas was responsible, a claim the Palestinian militant group has denied.
At the start of a meeting of the Israeli security cabinet, Mr Netanyahu said the three were "kidnapped and murdered in cold blood by animals" and promised: "Hamas will pay".
But Hamas spokesman Sami Abu Zuhri told the AFP news agency that any action to punish the movement would "open the gates of hell".
Israel's Shin Bet security service earlier said the main suspects in the case were two men named Marwan Qawasmeh and Amer Abu Aisheh and that they were "Hamas operatives".
Forensic teams were in the area and searches were continuing in an effort to capture "all those involved in this attack", it added.
Israeli security forces have set up blockades and closed down whole areas around Halhul, which is just a few kilometres from where the teenagers were last seen.
Israeli Economy Minister Naftali Bennett wrote on Facebook: "Murderers of children and those who direct them cannot be forgiven. Now is a time for actions, not words."
Israeli President Shimon Peres said the "whole nation is in deep grief". "Amid our deep sorrow, we remain determined to fiercely punish the criminal terrorists," he added.
White House spokesman Josh Earnest said: "We obviously condemn in the strongest possible terms violence that takes the lives of innocent civilians," AP reports. Naftali Frenkel held dual Israeli-American citizenship.
The abduction of the three Jewish seminary students on 12 June sparked a huge search operation in Palestinian towns and cities across the West Bank.
More than 400 Palestinians have been arrested, while five have been killed in fighting with Israeli troops.
Earlier, there were reports of clashes between Israeli soldiers and Palestinians in the Halhul area.
The case has put serious strain on relations between Israel and the Palestinians.
Mr Netanyahu has said the incident is a consequence of "the partnership" between Hamas and the Fatah movement of Palestinian Authority President Mahmoud Abbas. The two signed a reconciliation deal in April after years of division and formed a unity government earlier this month.
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