Bush calls for Mid-East restraint

The suicide bomb attack unleashed further violence

President George W Bush has expressed his frustration at the crisis in the Middle East, saying both Israel and the Palestinians have to do more to break the cycle of violence.

The US president said Palestinian leader Yasser Arafat must take action to catch those who carried out Thursday's devastating suicide bomb attack in Jerusalem.

Earlier the US State Department had also condemned Israel - for its takeover of Palestinian headquarters in East Jerusalem, as well as other political institutions.

These actions... increase the risk of further deterioration of the political situation

State Department

Meanwhile, hospital officials in Gaza say two Palestinians shot and wounded on Friday by Israeli troops have died. Reports say the Israelis fired live rounds during the clash near the Karni crossing.

Israeli Prime Minister Ariel Sharon has said Israel's takeover of Orient House in East Jerusalem is permanent, Israeli television reported.

The US State Department called the move "a serious political escalation" of the conflict and urged Israel and the Palestinians to refrain from further "incitement and provocations".

Israeli forces took over PLO buildings, including the house of the governor of the Palestinian town of Abu Dis, which borders East Jerusalem, in retaliation for Thursday's blast in which 15 people died, as well as the bomber.

Israel's takeover of Orient House is highly symbolic

Israeli riot police poured into Orient House and took control of the compound, arresting seven Palestinian guards in the process, and hoisting the Israeli flag for most of Friday.

BBC Jerusalem correspondent Nick Childs says Israel's takeover of Orient House is highly symbolic, undercutting the Palestinians' main political foothold in East Jerusalem, while asserting Israel's position.

Israel has long claimed the Palestinians' use of Orient House for political purposes violated interim accords, but has only closed it down once before, temporarily in 1997.

Israeli 'message'

Israeli Government spokesman Dore Gold says Israel's actions showed Mr Arafat that attacks by Palestinian militants would result in "political reverses".

However, State Department spokesman Richard Boucher said the US was dismayed the move did not appear to protect Israel against bombings.

Jordan and Egypt led condemnation of the Israeli attacks, and called for the re-opening of Orient House.

Arafat: Attack "part of an Israeli escalation"

Several people, including Europeans from the Committee for Solidarity with the Palestinian People, were arrested as hundreds of pro-Palestinian demonstrators gathered outside Orient House later on to protest against the takeover.

The French news agency AFP said the demonstrators tried to break through a cordon around the building but were beaten back by police.

Headquarters bombed

Israel's retaliation for the suicide attack had begun hours earlier when Israeli fighter planes attacked the Palestinian police headquarters in the West Bank town of Ramallah.

Speaking later during a tour of the demolished police station, Mr Arafat accused Israel of trying to conquer the Palestinians territory step-by-step.

Fifteen people were killed by a Palestinian suicide bomber in Jerusalem

The BBC's James Reynolds says Israel's reaction was not as violent as many Israelis had expected, with some calling for an overwhelming military attack on Palestinian targets.

Meanwhile, Israelis buried some of those killed in the Jerusalem bombing, including five members from one family who were buried in Jerusalem's main cemetery.

Thursday's bomb in Jerusalem was the most deadly attack since a Palestinian suicide bomber killed 20 Israelis in Tel Aviv on 1 June - and the worst by far in Jerusalem during the ongoing 10-month Palestinian uprising.