German Chancellor Angela Merkel will visit Israel at the end of February at the invitation of Prime Minister Benjamin Netanyahu, for annual talks between the two governments, a statement said Thursday.

Government spokesman Steffen Seibert said the two leaders had a phone conversation Thursday in which Netanyahu "invited the German government for talks at the end of February which must take place in Israel this year."

Israel is excavating an archaeological site in the flashpoint West Bank city of Hebron, officials said Thursday, in a move critics say aims to legitimize Jewish settlement in Palestinian territory.

The excavations began on January 5 during U.S. Secretary of State John Kerry's 10th visit to the region to push Israel and the Palestinians towards an elusive peace deal.

Israeli government websites were briefly downed on Thursday by a power cut at a server facility, a finance ministry official told Agence France Presse.

Boaz Stembler, a spokesman for the ministry which is responsible for government web services, did not say how long the stoppage lasted but that power was restored by 3:45pm (1345 GMT).

The health of former Israeli premier Ariel Sharon has worsened over the past hours, hospital officials said on Thursday, describing him as being in "extremely critical" condition.

"Over the past hours, there has been a worsening of the condition of former prime minister Ariel Sharon. His condition is described as extremely critical and his family is at his side all the time," said a statement from Sheba hospital near Tel Aviv where he is being treated.

Israeli settlements watchdog Peace Now has urged the government to dismantle an illegal outpost in the West Bank, after violent clashes in the area between Jewish settlers and Palestinians.

Israel must "enforce the law and remove Esh Kodesh, an illegal West Bank settlement established in violation of Israeli law", Peace Now said in a letter to the government, a copy of which was sent to Agence France Presse late on Wednesday.

An Israeli air strike wounded two Palestinian militants in the southern Gaza Strip on Thursday, medical and security sources said.

"Two Palestinians were hit and injured by an Israeli drone while they were riding on a motorbike east of Khan Yunis," Gaza's Hamas-run health ministry spokesman Ashraf al-Qudra told Agence France Presse.

Dutch pension asset manager PGGM, one of the largest in the country, said on Wednesday it was divesting from five Israeli banks because they finance Jewish settlements in the occupied Palestinian territories.

The announcement comes a month after a major Dutch water supplier ended a partnership with an Israeli water company which supplies Israeli towns and Jewish settlements in the occupied West Bank.

Caretaker Foreign Minister Adnan Mansour revealed on Wednesday that he had sent to United Nations chief Ban Ki-moon a complaint over Israel's spying activities.

“We also prepared a CD that includes information on the procedures taken and the spying devices planted on the border with the occupied Palestinian territories, which is a clear violation of international law and a continuous attack on Lebanon, the Lebanese people and the country's security military and civil institutions,” Mansour detailed.

More than 10,000 African asylum seekers rallied outside Israel's parliament in Jerusalem Wednesday, police said, in a fourth straight day of protests against immigration policy.

The demonstration was "calm," police spokesman Micky Rosenfeld told AFP, adding that police were deployed to keep order. He put the number of protesters at "more than 10,000".

Suspected Jewish extremists torched two cars near the West Bank city of Nablus on Wednesday, police said, a day after Palestinians beat and detained Israeli settlers in a nearby village.

The vandals also scrawled Hebrew graffiti, including the words "price tag" on a wall in Madameh village, west of Nablus, police spokesman Micky Rosenfeld told AFP.