Abu Hurayra reported that the Prophet, may Allah bless him and grant him peace, said, "Do not give the People of the Book the greeting first. Force them to the narrowest part of the road."
The reasons behind this;
Anas said, "A Jew passed by the Prophet, may Allah bless him and grant him peace, saying, 'Peace be upon you.' His Companions returned the salam.' The Prophet said, 'The Jew said, 'Poison (sam) be upon you.' He caught hold of the Jew who admitted it.' The Prophet said, 'Answer him with what he said.'"
Ibn 'Abbas said, "Return the greeting to whomever it is, Jew, Christian, or Magian. That is because Allah says, 'When you are greeted with a greeting, greet with one better than it or return it.' (4:86)"
Jabir said, "Some of the Jews greeted the Prophet, may Allah bless him and grant him peace, by saying, 'Poison be upon you (as-Samu 'alaykum)' and the Prophet replied, 'And on you.' 'A'isha, may Allah be pleased with her, said angrily, 'Didn't you hear what they said?' The Prophet replied, 'Yes, and I answered them. What I said about them will be accepted and what they said about me will not be accepted.'"
On the funny note;
'Abdu'r-Rahman said, "Ibn 'Umar passed by a Christian who greeted him and Ibn 'Umar returned the greeting He was told that the man was a Christian. When he learned that, he went back to him and said, 'Give me back my greeting.'"