US President Joe Biden said Tuesday that a ceasefire deal in Gaza could deter Iran from attacking Israel in retaliation for the killing of a Hamas leader that sent regional tensions soaring.

His remarks came after Iran rejected Western calls to "stand down" its threat of reprisals.

The Islamic republic and its allies have blamed Israel for Ismail Haniyeh's killing on July 31 during a visit to Tehran for the swearing-in of Iranian President Masoud Pezeshkian. Israel has not commented.

Palestinian official media said Israeli troops shot a man dead in the occupied West Bank on Tuesday during a raid to demolish the apartments of two detained Palestinian suspects, while the military reported it had opened fire to quell a riot.

"The occupation soldiers fired bullets and tear gas, killing a young man who was hit in the chest," the Palestinian official news agency, Wafa, reported.

US credit rating agency Fitch has downgraded Israel a notch, warning that its ongoing conflict against Hamas in Gaza could last "well into 2025" and weigh on economic activity.

Fitch lowered Israel's rating from "A+" to "A".

"The conflict in Gaza could last well into 2025 and there are risks of it broadening to other fronts," Fitch said in a note on Monday.

The United States confirmed Monday it would resume sales of offensive weapons to Saudi Arabia, as concerns over human rights in the kingdom's Yemen war give way to US hopes for it to play a role in resolving the conflict in Gaza.

More than three years after imposing limits on human rights grounds over Saudi strikes in Yemen, the State Department said it would return to weapons sales "in regular order, with appropriate congressional notification and consultation."

Iran could launch a "significant" attack on Israel as soon as this week, the White House said Monday, as US President Joe Biden discussed the crisis with European leaders.

"We have to be prepared for what could be a significant set of attacks," National Security Council spokesman John Kirby told reporters.

"We share the same concerns and expectations that our Israeli counterparts have with respect to potential timing here -- could be this week," added Kirby.

The United States and European allies called on Iran to "stand down" Monday, as fears mounted of an imminent attack on Israel that could spark an all-out war in the Middle East.

Tensions are soaring in the region, with the United States rushing a missile submarine and an aircraft carrier group in a show of support for its key ally.

Iran and its Lebanese ally Hezbollah have vowed revenge for the killing of the political leader of the Palestinian group Hamas in Tehran, and of a Hezbollah commander in Beirut.

Hussein Jamil held a permit to work in Israel for 22 years until the war in Gaza broke out. Now, after setting up a greenhouse in a West Bank village, he swears he'll never go back.

Harvesting his tomatoes in the occupied West Bank, the 46-year-old says his former Israeli boss has already called several times to ask him to return.

"But I told him that I would never go back to work there," he says in Bayt Dajan near Nablus, the northern West Bank's commercial centre.

The taps have run dry, and the wells are almost empty. In the capital of Iraq's autonomous Kurdistan region, 80-year-old Babir hasn't bathed in weeks and impatiently waits for trucked-in water deliveries.

"There is nothing worse than not having water," said Babir, who gave only his first name, in his modest house in Arbil's Darto suburb.

As in several other densely populated areas of Arbil and its suburbs, Babir and his neighbours rely on groundwater as their primary water source.

Hamas on Sunday urged Gaza mediators to implement a truce plan presented by US President Joe Biden instead of holding more talks, as Palestinians fled a new Israeli military operation.

The statement from the Palestinian group, whose October 7 attack on Israel triggered the war, came a day after one of the deadliest reported Israeli strikes on the besieged Gaza Strip in more than 10 months of war.

Hundreds of Gazans fled the northern neighbourhoods of Khan Yunis on Sunday after Israel issued fresh evacuation orders ahead of a new operation against Palestinian militants it says have taken refuge there.

Early in the morning the army dropped leaflets and sent mobile phone messages telling residents to leave the Al-Jalaa area of Khan Yunis, which was already considered a humanitarian safe zone.