Suspected Jewish extremists punctured the tyres of 28 cars in an Arab Israeli town and scrawled graffiti nearby in a likely "price tag" attack overnight, an AFP correspondent said on Tuesday.
On a wall near the vandalised cars in Abu Ghosh, a town west of Jerusalem, the perpetrators wrote in Hebrew "Arabs out" and "Racism or assimilation," the correspondent reported from the scene.
Police were investigating the attack, said spokesman Micky Rosenfeld, noting the crime had "strong indications" of being "nationalistically motivated".
Abu Ghosh has since Israel's inception maintained good ties with the state's Jewish majority, and attracts hordes of Israelis to its restaurants.
The use of the word assimilation is a negative reference to Jews and non-Jews mixing, and the term "price tag" is given to Jewish extremist hate crimes that generally target Arabs.
Initially carried out against Palestinians in retaliation for state moves to dismantle unauthorised settler outposts, price tag attacks have become a much broader phenomenon with racist and xenophobic traits.
They tend to involve the vandalism or destruction of property and have included arson attacks on cars, mosques and olive trees, but also target holy Christian sites and have even reached Israeli army bases.
Economy Minister Naftali Bennett condemned the attack on Tuesday, calling such acts "immoral and un-Jewish".
"There is a small group of evil-mongers who want to create a chain of hatred and violence between Arabs and Jews in our country," he wrote on Facebook. "We won't let them succeed."
Bennett also mentioned the security cabinet's decision on Sunday to "significantly expand the legal and investigative tools of security forces, in a bid to mitigate the phenomenon".
The cabinet decided to define suspects as part of "unlawful organisations", stopping short of the original justice ministry proposal to call their acts "terrorism".
Last week, two vehicles were burnt in an east Jerusalem neighbourhood, with the words "price tag" graffitied nearby.
In a separate attack, graves were desecrated in an Arab Christian cemetery in Jaffa, and two weeks ago, anti-Christian graffiti was daubed on the Church of the Dormition, one of Jerusalem's top pilgrimage sites.
A police official recently told a parliamentary committee that in 2012 they had opened 623 files on price tag attacks, arrested 200 people and served 123 indictments in connection with such acts.
This year, the official said, police had opened 165 files on attacks, arrested 76 suspects and served 31 indictments, stressing these crimes were considered ideologically motivated "nationalistic crimes" and were a "top priority" for police.