Board members denied the allegations, saying it was a public company with more than 4,000 shareholders and no links to politics or Hamas.

"We will not recognise the illegal measures taken by the army. We will not obey its orders," said Nablus governor Jamal Muheisen.

In another development, Israel has lifted the curfew imposed last week on the Palestinian town of Nilin west of Ramallah.

The town has been the scene of protests against Israel's West Bank barrier.

Israel occupied the West Bank and Gaza Strip in the 1967 war. It has settled hundreds of thousands of Israelis in the West Bank and keeps a large military presence there.

Mortar fire

In Gaza, Israel said it had agreed to an Egyptian request to re-open border crossings with the Gaza Strip.

Defence Minister Ehud Barak agreed the move in response to a special request from Egyptian intelligence chief Omar Suleiman, officials said.

Israel had earlier said crossings would be closed after Palestinian mortar fire on Monday.

The crossings have been sealed off a number of times since a fragile truce between Palestinian militants and Israel came into effect last month.

A Hamas delegation is currently having talks in Egypt to discuss the truce.

Israel pulled settlers and troops out of Gaza in 2005, but it has kept control of the strip's border crossings, territorial waters and airspace. Israel stages frequent raids into Gaza and militants have stepped up rocket fire into Israel since 2005.