* Four Israeli civilians shot dead
* Hamas claims responsibility, armed wing threatens more
* Israel says bid to derail diplomacy won't succeed
(Updates with Netanyahu, Hamas threat, changing dateline)
By Douglas Hamilton
JERUSALEM, Sept 1 Four Israeli settlers were shot dead in the occupied West Bank on Tuesday in an attack that Islamist Palestinian group Hamas said was its first assault on Middle East peace talks due to start on Wednesday in Washington.
Declaring war on negotiations promoted by U.S. President Barack Obama a few hours before he was to inaugurate fresh talks at a White House banquet with the Israeli and Palestinian leaders, Hamas militants who are backed by Iran said the killings were just the first phase.
"This attack is a chain in a series of attacks, some have been executed, and others will follow," Abu Ubaida, a spokesman for the armed wing of Hamas, told Reuters.
The Hamas armed wing, Izz el-Deen al-Qassam, issued a statement earlier saying it "announces its full responsibility for the heroic operation in Hebron".
The claim confounds recent Hamas signals that it does not want militants to rekindle attacks on Israel that triggered a devastating Israeli military assault in the winter of 2008-09 in which 1,400 Palestinians and 13 Israelis were killed.
But the Islamist group which controls the Gaza Strip opposes the peace talks and is not taking part. It says Western-backed Palestinian President Mahmoud Abbas, who controls the West Bank, is a "traitor" for talking to the Israelis about a peace deal.
The United States and allies in the search for a Middle East settlement had urged all parties to refrain from any action that might disrupt direct negotiations after a hiatus of 20 months.
Israelis and Palestinians alike predicted opponents of peace would try to derail talks with bloodshed, as in the past.
NETANYAHU DEMANDS SECURITY
Israeli Prime Minister Benjamin Netanyahu, who was to dine with Abbas and Obama on Wednesday before initial negotiations the following day, said the attack proved there must be "no compromise" on Israeli security demands, a spokesman said.
"This criminal murder proves again the need to stand firmly on Israel's stringent security demands, and there will be no compromise on them," Nir Hefez told reporters in Washington.
Netanyahu "ordered security forces to act without political limits to catch the murderers and react aggressively," he added.
In the West Bank's administrative capital, Ramallah, Prime Minister Salam Fayyad condemned the shooting in a statement, saying it "contravenes the interests of Palestinians". He promised action to prevent any repeat.
Hamas does not recognise Fayyad.
"This was a terrorist attack and the army is treating it as a grave incident," Israeli Army spokeswoman Lieutenant Colonel Avital Leibovitch said. Army sources said all four victims were Israelis from the Beit Haggai settlement.
Tuesday evening's shooting was the most lethal attack in the West Bank in four years, the Army said. A suicide bombing killed four Jews at a West Bank settlement in 2006. In Jerusalem two years ago eight Jews were killed at a seminary.
Defence Minister Ehud Barak said Israel would "exact a price" for the killings.
"This was an apparent bid by lowly terrorists to sabotage the attempt to achieve a diplomatic process and to try to hurt the chances of the talks opening in Washington," Barak said.
BUSY HIGHWAY FOR BOTH
The four Israelis were shot in their vehicle near Bani Naim, close to the flashpoint West Bank city of Hebron, which has seen violence for decades but has been quiet for some months. Israeli settlers live in a tiny enclave in the city amid Palestinian residents, under the close protection of Israeli army forces.
The attack took place after dark on Highway 60, a busy route used by both Palestinians and Israeli settlers.
U.S. State Department spokesman P.J. Crowley said Washington realised there were "actors in the region who are deliberately making these kinds of attacks in order to try to sabotage the process."
U.N. Special Coordinator for the Middle East Peace Process Robert Serry urged "all parties not to allow the enemies of peace to derail the negotiations about to be launched".
Hamas spokesman Aub-Zuhri said the attack was proof "of a failure of security coordination" between Israel and the Palestinians -- a reference to the Western-backed Palestinian Authority under Abbas and Fayyad, whose U.S.-trained forces are credited with suppressing armed militants in their territory.
Formal face-to-face peace talks are due to begin on Sept. 2, the first direct negotiations since they broke off in late 2008.
But the Palestinians are fundamentally split, with Hamas condemning the talks as a sell-out.
One Hamas armed wing spokesman said the killings were "a natural response to the crimes of the occupiers" and speeches from loudspeakers at a mosque in the northern Gaza Strip celebrated news of the attack.
(Reporting by Alyn Fisher-Ilanin Jerusalem, Tom Perry and Mohammed Assadi in Ramallah and Nidal al Mughbrabi in Gaza; Writing by Douglas Hamilton; Editing by Peter Graff)