JERUSALEM - A Palestinian man rammed a car into pedestrians near a street market in Jerusalem on Monday, injuring five people before he was shot and killed, Israeli police said in a statement.

The incident took place on a busy street next to Jerusalem's Mahane Yehuda Market, a crowded souk in the city center.

The suspect, a 39-year-old Palestinian man from the town of Beit Safafa in Jerusalem, was "neutralized" and killed at the scene, according to the statement.

CCTV footage shows that the driver deliberately crashed his car into the crowd, and "a preliminary examination has ruled out any mechanical fault in the vehicle", Israeli police said.

Israel's rescue service Magen David Adom said in a statement that a 70-year-old man sustained serious wounds in the attack.

At a ceremony to mark Israel's Memorial Day for fallen soldiers, beginning at sundown Monday, Prime Minister Benjamin Netanyahu said the car-ramming was "a terrorist attack".

The incident was the latest in an escalation of violence in the region. It came hours after Israeli troops shot and killed a 20-year-old Palestinian man in the Aqbat Jaber refugee camp in the occupied West Bank during an arrest raid.