Israel calls off withdrawal talks

The meeting between Israeli Defence Minister Binyamin Ben-Eliezer and Palestinian Interior Minister Abdel Razak Yehyah was cancelled following fresh violence in the Gaza Strip, the Israeli Defence Ministry said.

Hours before the two were due to meet, Israel deployed land, sea and air forces to foil what it said was a Palestinian attempt to smuggle arms into Gaza by sea, while the army said a Palestinian mortar hit a Jewish home in southern Gaza.

Two Palestinians have been killed in Wednesday's violence.

Mohammed Barakeh, aged 25, was shot dead near the Gush Katif Jewish settlements. The Israeli army said he was throwing stones at a military post.

Mohammed Amouri, aged 34, died in a refugee camp in the West Bank town of Jenin, during an exchange of fire between Palestinian and Israeli forces as the Israeli army moved in to re-impose a daytime curfew.

Gaza incursion

Israeli troops raided a Palestinian village south of Gaza City in the deepest incursion in the area since the start of the Palestinian uprising in September, 2000.

Palestinian witnesses said 11 tanks and armoured personnel carriers moved into Sheikh Ajli, which was plunged into darkness by a power failure.

Israeli forces pulled back after several hours to positions around the Jewish settlement of Netzarim, Reuters news agency said, with no reports of injuries.

Israel said it launched its operation in Gaza following intelligence reports that Palestinians were trying to smuggle arms into the Gaza Strip from the sea.

Israel radio said barrels found floating in the sea aroused suspicion of a smuggling operation.

The radio said barrels have been used before to point out sunken arms caches.

Israeli helicopters and gun-boats fired at the barrels as the surf was illuminated by flares, reportedly causing one to blow up.

Israeli military sources said the navy retrieved some of the more than 20 barrels.

Talks cancelled

The withdrawal of Israeli troops from the Gaza Strip had been due to be discussed at talks between the Israeli defence minister and Palestinian interior minister on Wednesday.

But the Israeli Defence Ministry said that Mr Ben-Eliezer "has made it clear to the Palestinians that he expects from them vigorous action to halt terrorism and violence, as well as smuggling by sea and on land".

Nabil Abu Rudeineh, an aide to Palestinian leader Yasser Arafat said: "The Israeli decision [to cancel the meeting] does not surprise us. We are used to Israel slipping away from all agreements."

Under the Gaza-Bethlehem First plan, Israeli forces would pull back in stages from Palestinian areas in return for Palestinian security guarantees.

Israeli forces left Bethlehem last week in a first test of the plan, but further withdrawals have stalled amid continuing violence.

Palestinian security forces said they began returning to some positions in the Gaza Strip on Wednesday morning as part of the agreement reached with Israel last week.