By Jeffrey Heller

JERUSALEM (Reuters) - A Palestinian fatally stabbed a 13-year-old Israeli girl in her bedroom in a settlement in the occupied West Bank on Thursday, the military said, as international sponsors of frozen peace talks prepared to issue a report on the impasse.

Israeli guards in the settlement of Kiryat Arba shot the attacker dead and one member of the civilian armed response team was wounded, a military spokesman and a settler leader said.

The assailant was identified as a 19-year-old male from a nearby Palestinian village. Prime Minister Benjamin Netanyahu said his home would be destroyed and permits enabling his relatives to work in Israel revoked.

Netanyahu, in a statement, called on Palestinian leaders to condemn the attack and take immediate steps to stop what he described as incitement that Israel has cited as a main factor behind a string of assaults over the last nine months.

"The horrific murder of an innocent girl in her bed sheds light on the bloodlust and lack of humanity displayed by the terrorists we are facing," he said.

Malachi Levinger, chairman of Kiryat Arba's governing council, said the assailant climbed a security fence and entered a home where he attacked Hallel Yaffa Ariel, 13. Photos released by the military showed blood on the bed and floor in her room.

In Washington, the State Department confirmed the teenager was a U.S. citizen. "This brutal act of terrorism is simply unconscionable," said spokesman John Kirby.

In a separate attack in the Israeli city of Netanya, a Palestinian stabbed two Israelis, seriously wounding one of them, near an outdoor market before being shot and killed by an armed passerby, said a police spokesman.

Since October, Palestinians have killed 33 Israelis and two visiting U.S. citizens in a wave of street attacks, mostly stabbings. Israeli forces have shot dead at least 199 Palestinians, 135 of whom Israel has said were assailants. Others were killed in clashes and protests.

Palestinian street attacks no longer occur on a near-daily basis but even though the incidents are less frequent, Israelis have been kept on edge by attacks such as the shooting that killed four people in Tel Aviv on June 8.

Palestinian leaders say assailants have acted out of desperation over the collapse of peace talks in 2014 and Israeli settlement expansion in occupied territory that Palestinians seek for an independent state. Most countries view the settlements as illegal. Israel disputes this.

Israel says incitement in the Palestinian media and personal problems at home have been important factors that have spurred assailants, often teenagers, to launch attacks.

Tensions over Jewish access to a contested Jerusalem holy site, revered by Muslims as Haram al-Sharif (Noble Sanctuary) and Jews as Temple Mount, have also fueled the violence.

Spurred by the bloodshed and diplomatic stalemate, the "Quartet" of sponsors of Middle East peace negotiations - the United States, European Union, United Nations and Russia - were expected to issue a report before the weekend recommending "confidence-building steps" toward a two-state solution.

The report cites violence and incitement, settlement expansion and a lack of control of the Gaza Strip by the Palestinian Authority as undermining hope for Middle East peace, according to a U.N. official.

(Reporting by Jeffrey Heller; Editing by Dominic Evans and Cynthia Osterman)