Israeli police arrested the two settlers over the killing on Friday of a 19-year-old Palestinian near Burka village in what their lawyers say was a self-defense shooting by one of them at a much larger group of rock throwers.

"We strongly condemn yesterday's terror attack by Israeli extremist settlers," the US State Department's Near East Bureau said on Saturday, in its first application of the term in the context of settler violence.

Police initially accused the settlers of "deliberate or depraved-indifference homicide" with a racist motivation, but a member of Prime Minister Benjamin Netanyahu's security cabinet argued that culpability for the Burka death was far from clear.

'Their act was to save lives,' lawyer claims
"I wouldn't advise treating the US definition as a precise professional definition. At the end of the day, they are not drawing on intelligence, but on media reports," said Agriculture Minister Avi Dichter, a former counterterrorism chief for Israel's Shin Bet security service.

"Everything gets poured into media reports - things that are correct, things that are wrong, tendentious and other things. At the end of the day, what is important as far as we are concerned is what happened there," he told Army Radio.

Jerusalem District Court heard arguments that the suspects - one of whom had been hospitalized, with a police guard, for a head wound - should be freed pending possible prosecution.

"Their act was to save lives - their lives and others' lives," defense lawyer Nati Rom told reporters. "It's very sad to see them here in court and hopefully they will be released soon."