Wednesday, October 3 6:07 AM SGT

Deadly Palestinian raid on Jewish settlement pushes truce to breaking point

GAZA CITY, Oct 2 (AFP) - Palestinian gunmen seized a house and open fire on Israelis in a Jewish settlement in the Gaza Strip Tuesday, in a deadly raid which dealt a blow to a crucial ceasefire just hours after US President George W. Bush declared his backing for a Palestinian state.

At least three unidentified gunmen burst into the settlement of Alei Sinai, on the northern edge of the Gaza Strip, occupied a house and sprayed the area with bullets, killing two Israelis and wounded 14 more, army sources said.

After an armed stand-off that lasted at least three hours, Israeli snipers killed the three Palestinian gunmen and were searching for any other assailants who might have infiltrated the settlement.

A military official said the two Israelis killed were a young woman on leave from the army and her boyfriend.

It was not immediately clear if the gunmen had also taken hostages in the house they held.

Three of the injured were Israeli soldiers who had rushed from the neighbouring settlement of Dugit to reinforce their comrades under fire.

Palestinian leader Yasser Arafat slammed the attack as an "violation of the ceasefire" he signed with Israel last Wednesday, and which has already been strained to breaking point by weekend clashes which left 11 Palestinians dead and more than 200 wounded.

Arafat gave orders to his Palestinian security forces to find out which militant group was behind the attack.

No group claimed responsibility for the unprecedented attack.

An Israeli government official said the raid came as Israel was honouring its side of the September 28 truce deal by easing restrictions in the Palestinian territories, and said the army had opened a roadblock in the area of the attack earlier in the day.

Israeli radio said Israeli Prime Minister Ariel Sharon had convened a cabinet meeting for 1:00 am Wednesday (2300 GMT Tuesday) to discuss the situation.

The government official said he doubted the attack -- which came after a weekend of raging violence that cost a dozen Palestinian lives -- would derail Israeli moves to comply with the truce deal.

He said Israel would try to stick by its commitments to Washington to help quell the year-long crisis, thereby facilitating US efforts to piece together an anti-terrorist coalition with moderate Arab and Muslim states.

Despite Arafat's rapid condemnation of the attack -- in itself, part of the truce deal to publicly denounce all violence -- the official said Israel would examine whether he was serious about cracking down on violence.

The Palestinian leader earlier ordered a West Bank commander of his own Fatah movement arrested, after Israeli accused the man of being behind the killing of an Israeli woman near Bethlehem two weeks ago.

But armed supporters of commander Ataf Abayat threatened to open fire on the neighbouring Jewish settlement of Gilo if their chief was arrested.

After negotiations Abayat signed a police document acknowledging he was under arrest but was not detained.

In the aftermath of the stand-off, the Palestinian Authority removed from their posts Bethelehem's governor, police chief and security commander, officials said.

The army said one of its positions near Gilo came under fire but no one was injured.

The Israeli government official said it was not clear if Arafat was sincere about the crack down or trying to do just enough to pacify Washington.

President Bush said earlier that "the idea of a Palestinian state has always been part of a vision, so long as the right to Israel to exist is respected."

Secretary of State Colin Powell, speaking later, echoed that statement.

"There has always been a vision in our thinking as well as in previous administrations' thinking that there would be a Palestinian state that exists at the same time that the security of the state of Israel was also recognized, guaranteed and accepted by all parties," Powell said.

Hardline Islamic groups led by Hamas and Islamic Jihad refuse to recognise Israel's right to exist and have sworn to fight on despite Arafat's peace initiative.

Islamic Jihad claimed responsibility for a car omb which exploded in Jerusalem on Monday without injuring anyone.

The latest unrest took the death toll for the year-long intifada to 846, including 652 Palestinians and 171 Israelis.

-- Anonymous, October 02, 2001