By Ali Sawafta

KAUBER, West Bank (Reuters) - The Israeli military on Tuesday demolished the family home of a Palestinian teenager in the occupied West Bank who killed an Israeli in a Jewish settlement a month ago and was shot dead in the attack.

Footage distributed by the military showed an armoured bulldozer tearing into the one-storey structure in the village of Kauber, north of the Palestinian city of Ramallah.

Mohammed Tareq Ibraham Dar Youssef, 17, broke into the settlement of Adam on July 26, and stabbed three people, killing Yotam Ovadia, 31. One of those wounded in the assault fatally shot the Palestinian, the military said.

Dar Youssef's uncle, Khaled Abu Ayyoush, said the youth's parents, two brothers and two sisters had lived in the house razed in the night-time operation. The family, he said, had known nothing of his intention to carry out an attack.

"Why are they at fault? Israel's continued policy of collective punishment is merciless," Abu Ayyoush said.

Israel's Supreme Court has upheld the demolition policy, which Israeli officials have termed both punitive and a deterrence to potential attackers.

In a statement, the military said dozens of Palestinians hurled rocks, firebombs and pipe bombs at troops who deployed in the village and that they responded with "riot dispersal means". It said none of the soldiers was hurt. There were no immediate reports of any Palestinian injuries.

"We entered tonight to close a circle and we destroyed the terrorist's home," Lieutenant-Colonel Liron Appleman, a battalion commander, said at the scene in the video clip provided by the military.

Although stabbings and car-rammings carried out by Palestinians since late 2015 have become less frequent in the West Bank, tensions have remained high in the aftermath of U.S. President Donald Trump's recognition of Jerusalem as the capital of Israel in December.

Palestinians seek to establish a state in the West Bank and Gaza Strip with East Jerusalem as its capital, and say Israel's expansion of settlements in occupied territory could deny them a viable and contiguous country.

Israeli-Palestinian peace talks collapsed in 2014.

(Additional reporting and writing by Jeffrey Heller; Editing by Alison Williams)

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