Clashes as Mid-East deadline looms

A car bomb blast targeted a Jerusalem shopping district

An Israeli deadline for the Palestinians to halt all violence has been extended by a few hours but there is little sign of a real ceasefire taking hold.

Israel is observing the Jewish holiday of Sukkot on Tuesday - meaning that the government will not review the security situation until after sunset (about 1500 GMT).

We don't see a ceasefire, only the continuation of terror

Avi Pazner, aide to Prime Minister Ariel Sharon

Israel has made it clear that if the Palestinian leader, Yasser Arafat, does not implement a ceasefire, Israel may renew its strategy of attacks.

There was further violence overnight.

Israel Radio reported three Palestinian mortar bomb attacks in the Gaza Strip, and seven hand grenades were thrown at Israeli soldiers.

Several shooting incidents between the two sides - both in Gaza and the West Bank - were also reported, but there were no casualties.

US pressure

The United States has said it is deeply troubled by the surge of violence in recent days, and is urging both sides to restore calm as it tries to build its coalition against terrorism.

On Saturday the Israeli security cabinet decided to issue Mr Arafat with a 48-hour ultimatum to curb the violence or risk renewed Israeli attacks.

But on Monday a car bomb exploded in Talpiot - a popular shopping district in Jerusalem. It was the first such blast since a ceasefire was agreed on 18 September.

Israel continues to insist that it is fulfilling its side of the current agreement, by lifting restrictions on Palestinian areas and by withdrawing its tanks where there is calm.

In return, Israel has demanded that the Palestinian Authority arrest suspected militants and end the violence.

Mr Arafat says he is willing to have another meeting with the Israeli Foreign Minister, Shimon Peres, but he is also accusing Israel of deliberately escalating the crisis.

At least 18 Palestinians have been killed in the past few days.

Although the militant group Islamic Jihad has said it was behind the Jerusalem explosion - hardline Palestinians have said they will not observe the ceasefire - Israeli officials hold Mr Arafat to be ultimately responsible.

Bombing condemned

Despite the violence, a meeting between Palestinian and Israeli officials went ahead on Monday as planned, at which Israeli Defence Minister Binyamin Ben-Eliezer approved measures to ease travel restrictions on the Palestinians, a Defence Ministry statement said.

Israelis are celebrating the Festival of Sukkot

Israeli officials said the Jerusalem car bomb blast marked a definite escalation of violence.

The device was packed with bullets designed to produce shrapnel, the police said. It exploded on the busy Bethlehem Road, which links Jerusalem and the West Bank town of Bethlehem to the south.

"It is obvious that the Palestinian Authority is not doing enough, or anything to stop the violence," Avi Pazner, a close aide to Prime Minister Ariel Sharon, told the French news agency AFP.

"We don't see a ceasefire, only the continuation of terror."

In a separate development, Mr Peres has denied saying that he believed leaders of Israel's army wanted to kill Mr Arafat. Mr Peres said he had been misquoted in an article in an Israeli newspaper.