BBC Thursday, 10 May, 2001, 14:21 GMT 15:21 UK

Israel hits Arafat's nerve centre

Israel has launched a missile strike on the Palestinian police headquarters in Gaza city, the first time the security headquarters have been targeted in seven months of violence.

Palestinian security sources say four missiles hit a cluster of offices used by security agencies. There are no immediate reports of casualties.

There are reports of mayhem from the scene, with policemen running out of the walled security compound and ambulances rushing inside, while rockets continued to crash down.

Another missile has reportedly struck offices of Palestinian President Yasser Arafat's Fatah faction near the coast.

Earlier, the Israeli army burned farmland and destroyed a police station near the Kissufim n border crossing with Israel in its fifth incursion into Palestinian-controlled territory in two days.

The move was came in response to a bomb attack which killed two Romanian workers and seriously injured a third near the border crossing.

Tens of thousands of migrant workers from Romania and other countries work in Israel, having replaced Palestinians who have been eased out of the job market in recent years due to Israeli security fears.

The dead men - the first migrant workers thought to have to died in months of Israeli-Palestinian violence - had been repairing the security fence between Israel and the Gaza Strip.

The subsequent Israeli bombardment is reported also to have hit a nearby Palestinian village, wounding three security officers and one civilian.

Settler blow

In another development Raanan Gissin, a senior adviser to Prime Minister Ariel Sharon, confirmed to the BBC that the proposed budget for Jewish settlements has been severely reduced.

His confirmation follows reports on Israeli Radio that the overall settlement budget over the next five years would fall from $375m to about $150m.

Earlier this week the US State Department called the proposed funding for settlements provocative, but Mr Gissin denied the reduction was due to American pressure.

Meanwhile, the Israeli Government has said it will hunt down the killers of Yosef Ishran and Yaakov Mandel, the two teenage settlement-dwellers found bludgeoned to death in the West Bank on Wednesday.

Police suspect the boys were stoned to death by Palestinian militants, said spokesman Raffia Yaffe.

Mr Sharon described the "horrifying murders" as "another escalation in the terrorist activities and violence carried out by the Palestinians against an innocent civilian population".

He called on the Palestinian Authority to "halt terrorism and stop the poisonous incitement against Israelis and Jews" in the official Palestinian media.

'Unacceptable targets'

Palestinian officials have also condemned the killings. Senior negotiator Saeb Erekat said children and civilians were unacceptable targets, whether they were Palestinians or Israelis.

The settlements on Arab land captured by Israel in 1967 - which are illegal under international law - are one of the major sticking points blocking any long-term peace deal.

Palestinians say there can be no peace with Israel while the land remains under occupation, but Mr Sharon has so far refused to consider a freeze on settlement activity while the violence continues.

More than 400 Palestinians and about 80 Israelis have been killed in more than seven months of violence between the two sides.

-- Anonymous, May 10, 2001