President Bush reacted angrily to the bombing
US President George W Bush has condemned the bomb attack in Netanya, and called on Yasser Arafat to do everything in his power to stop what he called "terrorist killing".
Secretary of State Colin Powell said that the US envoy, General Anthony Zinni would remain in the region ready for further talks.
The American fear is that the bombing will derail what is left of the Zinni mission and drive Israel towards a policy of reoccupying the Palestinian territories.
At the start of the day President Bush reported progress in the Zinni talks.
But within hours, there was a tone of desperation in the voices of the administration.
Condemnation
Mr Bush himself, saying that his heart broke for the innocent lives lost on a daily basis, called the bombing callous, cold-blooded killing which had to stop.
"I condemn it in the most strongest of terms. I call upon Mr Arafat and the Palestinian Authority to do everything in their power to stop the terrorist killing," he said.
Fears of war
Secretary of State Colin Powell was more specific.
Mr Arafat should broadcast to his people, he said, and tell them they were destroying their own vision for a Palestinian state living side by side with Israel.
The implication here was again ominous: this way lies war.
Washington's plans of recent days are in tatters and it is scrambling to put something back together.
It had hoped to get Mr Arafat to Beirut to endorse the Saudi plan in person.
There are now serious doubts as to whether the current Israeli restraint will continue and if that proves so, then General Zinni's role will be over.
But he will stay where he is, prepared to engage with the parties though the tempo of talks might well slow down over the Passover period.