RAMALLAH, West Bank, Oct 15 (Reuters) - Israeli soldiers shot dead a Palestinian in the occupied West Bank on Wednesday during a violent demonstration in protest at the killing of another man a day before, residents and hospital officials said.

They said the 21-year-old was shot in the chest as Palestinians burnt tyres to block a road north of the hub city of Ramallah, 100 metres (yards) from the heavily guarded Jewish settlement of Beit El. He later died of his wounds.

An Israeli military spokesman said troops shot a protester who had been preparing to attack them with a petrol bomb.

Palestinian witnesses confirmed that the man who was shot was at the protest but did not say to what extent he had taken part. The demonstration was called in memory of an 18-year-old from a Palestinian refugee camp near Ramallah who was shot dead by soldiers on Tuesday. The army said that Palestinian, as well as two others who fled the scene, were suspected of preparing to attack Beit El with petrol bombs.

Palestinian youths frequently throw stones and sometimes petrol bombs at settler cars or military vehicles in the occupied territory. Serious casualties are rare.

Tensions have been running high in recent days following clashes between Arabs and Jews in the Israeli city of Acre during a period of Jewish holidays that continue into next week.

Friction between Palestinians and Jewish settlers in the West Bank has also been on the increase in recent weeks -- Jews have complained of attacks on them and Israel's prime minister denounced what he called a "pogrom" by settlers near Nablus.

The United States and Israel's other allies have long urged it to remove the half million Israelis who live on occupied land in defiance of international law. Palestinians say the settlements hinder any peace with Israel. (Reporting by Ali Sawafta, Writing by Dan Williams, Editing by Alison Williams)

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