Jerusalem (AFP) - Israeli police braced for the funeral Saturday of a Palestinian driver who drove into a crowd, killing an Israeli baby, with tensions further stoked after the army shot dead a West Bank teenager.

Police were "ready for anything" after fresh disturbances in Arab east Jerusalem prompted four arrests overnight, spokeswoman Luba Samri told AFP.

Police branded as a "terror attack" an incident Wednesday's in which Abdelrahman Shaludi, 21, from east Jerusalem's flashpoint Silwan neighbourhood drove at high speed into a crowd of Israelis.

Three-month-old Haya Zissel Braun was killed and six others injured.

Shaludi was shot dead by police as he fled on foot.

Palestinian sources said he was to be buried in Jerusalem at 10:00 pm (1900 GMT) Saturday.

Public radio said the timing was set by Israeli authorities, who also imposed a maximum limit of 80 mourners for fear the event could turn into a violent protest.

In the occupied West Bank, relatives of Palestinian teenager Orwa Hammad, shot dead Friday, said his funeral would take place on Sunday, to allow his father time to travel from the United States where he is a resident citizen.

They said the teenager, also a US national, was 14 and not 17 as initially reported by Palestinian officials.

The baby Israeli girl killed Wednesday was a US citizen too, Washington has confirmed.

The army said Hammad had been about to hurl a petrol bomb at Israeli motorists near the West Bank city of Ramallah when he was shot by troops on a stakeout in the village of Silwad to protect a road frequently used by Jewish settlers.

"The forces fired immediately to neutralise the danger... and confirmed a hit," a spokeswoman said.

Palestinian officials said Hammad was shot during a stone-throwing protest against troops, a regular occurrence in Silwad, which lies close to the Jewish settlement of Ofra.

Washington expressed its "deepest condolences to the family of a US citizen minor who was killed by the Israeli Defence Forces".

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- US calls for 'transparent investigation' -

State Department spokeswoman Jen Psaki called for "a speedy and transparent investigation" into the teenager's death.

"We continue to urge all parties to help restore calm and avoid escalating tensions in the wake of the tragic recent incidents in Jerusalem and the West Bank," she added.

Hardline housing minister Uri Ariel has informed Israel's Shin Bet domestic security service that he is considering moving into Silwan, Israel's Channel Two TV reported late Friday.

It cited security sources as saying that was likely to further inflame feelings in an already volatile spot.

On Monday Palestinians hurled petrol bombs at a Silwan apartment building hours after it was taken over by Jewish settlers.

Ariel, deputy leader of the far-right Jewish Home party who currently lives in the West bank settlement of Kfar Adumim, is seeking to test Prime Minister Benjamin's assertion that Jews have the right to live anywhere, the TV said.

It would also be a symbolic challenge to the US administration, which has expressed "deep concern" over settlement building in mainly Arab east Jerusalem, Channel Two added.

Israel seized Arab east Jerusalem during the 1967 Six-Day War and later annexed it, in a move never recognised by the international community. Some 200,000 Israelis live there alongside about 300,000 Palestinians.

Israel regards the entire city as its "undivided capital" and does not see construction or the purchase of houses in the eastern sector as settlement activity.

The Palestinians want east Jerusalem as the capital of a future state.