A senior Palestinian official told Haaretz the Palestinians decided not to attend the meeting Monday to protest the deaths inside the Qalandiyah refugee camp.
"We have made it clear on several occasions that the negotiations will be affected by policy and measures that undermine the process," said Palestinian Foreign Affairs Minister Riyad al-Malki.
"There is no doubt that what happened this morning will have an effect."
Three Palestinians were shot and killed during early morning clashes with Israeli Border Police in the refugee camp near Jerusalem. Fifteen Palestinians were wounded, six in serious condition, Palestinian sources said.
The Monday evening meeting would have been the fourth since the peace process was renewed. After a meeting last week, Palestinian Authority President Mahmoud Abbas said an agreement was possible if Israel was honest.
The Border Police apparently entered Qalandiyah to arrest a terror suspect. Once the arrest was made and they were exiting, they were attacked by hundreds of Palestinians who threw stones and bricks, the Israeli military said.
Israeli Artillery Corps troops stationed in the area were called in to extract the police force.
Fighting involving live fire followed, Haaretz said.
"During a nighttime incursion of security forces to arrest a suspect in Qalandiyah, southeast of Ramallah, they were met with violent and disorderly conduct by hundreds of Palestinians who attacked them," an Israeli military statement said.
When the Israeli troops "felt immediate danger to their lives, they opened fire at the attackers," the statement said.
A spokesman for Abbas warned of the confrontation's implications.
"The continued criminal acts by the Israelis, alongside the continued [construction of settlements] expose the true intentions of Israel's government and the actions it takes to foil the peace talks," said Nabil Abu Rudeineh. "I call on the U.S. administration [which got the peace talks started] to thwart the collapse of the negotiations."