Four Palestinian militants died late Sunday, apparently when a bomb they were planting went off in northern Gaza. Prime Minister Ariel Sharon said Israel could still build Jewish settlements in defiance of a US-backed peace plan.

Palestinians walk past a Israeli tank positioned near Erez Crossing cutting off the Palestinian town of Beit Hanoun from the rest of Gaza Sunday, June 22, 2003. The checkpoints have caused great hardship in the past 33 months. Palestinian motorists are often unable to get from one end of Gaza to the other, meaning they can't reach schools and jobs. [AP]

At first, Palestinian security officials said Israeli tanks fired at a group of militants from the Al Aqsa Martyrs' Brigades, affiliated with the Yasser Arafat's mainstream Fatah, killing three men and wounding four others, in the northeast Gaza town of Beit Hanoun. Another died later in a hospital, doctors said.

Later, however, loudspeaker trucks drove through the area saying that the four died while "fulfilling their national duty," a phrase used in the past to announce accidental deaths.

Israeli military sources, speaking on condition of anonymity, said Israeli forces did not fire tank shells. Instead, they said, the militants were on their way to plant a bomb and it went off prematurely, killing them.

Israeli forces have maintained a presence near Beit Hanoun for several weeks, trying to prevent Palestinians from firing rockets at a nearby Israeli town.

Early Monday, about 15 tanks entered the town of Qarara in central Gaza and surrounded the house of a Hamas leader, security officials said.

Earlier, Sharon told his Cabinet that settlement construction in the West Bank and Gaza Strip should proceed quietly, a senior Cabinet official quoted the prime minister as saying. Israel TV's Channel 1 said Sharon told the ministers that settlement building "isn't part of the road map, it's my personal commitment."

Under the so-called "road map" for peace, Israel would have to observe the building ban in the coming months, after the Palestinians begin dismantling militias and Israel removes dozens of settlement outposts.

Sharon adviser Raanan Gissin said Israel would continue construction in built-up areas of settlements. Asked about the required freeze, he noted that the Cabinet, in voting on the plan, attached objections.

Mideast mediators, meanwhile, expressed concern over Israel's killing of Abdullah Kawasme, a local leader of the Hamas militant group in the West Bank city of Hebron.

Secretary of State Colin Powell said the killing Saturday could set back peace efforts, but stopped short of directly criticizing it.

"We can't allow ourselves to be stopped because of these incidents," Powell said after meeting with other leading members of the so-called Quartet of mediators - the United States, the United Nations, the European Union and Russia - during an economic conference in Jordan.

The Quartet is trying to rescue the peace plan, buffeted by Mideast violence since its launch by President Bush on June 4.

The mediators said they deplore "brutal terror attacks against Israeli civilians," but also expressed "deep concern over Israeli military actions that result in the killing of innocent Palestinian and other civilians."

The statement did not refer to Israel's extrajudicial killings of wanted Palestinians, which have emerged as an obstacle to Palestinian Prime Minister Mahmoud Abbas' efforts to persuade militant groups to halt attacks. The armed groups have said they will agree to a truce only if Israel halts military strikes, including such killings.

Hamas leaders said Sunday they would respond soon to the Egyptian-brokered cease-fire proposal. Palestinian Cabinet officials have said the response would come by Monday.

However, Hamas also threatened new attacks in response to the shooting of Kawasme, blamed by Israel for planning nine attacks that killed 35 Israelis.

"There will be a retaliation," Hamas spokesman Abdel Aziz Rantisi, who survived a recent Israeli missile strike against him, told reporters in Gaza.

The Israeli military said troops tried to arrest Kawasme, and that he was killed after he did not heed calls to stop. The wanted man was armed, the military said.

A Palestinian witness, Mohammed Nasser Eddin, said Kawasme was unarmed and tried to run from soldiers encircling him in three vans outside a mosque in Hebron.

Israel said Kawasme was a prime example of a "ticking bomb," an imminent threat of terror attacks. Palestinian officials accused Israel of trying to undermine truce efforts.

The "road map" starts with a halt to violence, a crackdown on militant groups, the dismantling of settlement outposts and leads through three stages to a Palestinian state in 2005.

The plan is ambiguous about targeted killings. While it does not list them specifically as forbidden, it bans Israeli "actions undermining trust."

Regarding settlements, the plan says Israel must dismantle all outposts put up since March 1, 2001 - more than 60, according to an anti-settlement watchdog group - and "freezes all settlement activity."

Gissin said the demand to freeze all construction is unrealistic.

"There can't be a total freeze on any construction, because you can't freeze life in those places," he told The Associated Press.

In Sunday's Cabinet meeting, the debate on settlements began when several ministers attacked Infrastructure Minister Yosef Paritzky from the moderate Shinui party for saying he wants to draw up a plan for moving settlers to Israel's Galilee region and the southern Negev Desert.

One of the ministers proposed moving settlers from smaller settlements to Ariel, the second largest settlement in the West Bank, according to a senior Cabinet official, who briefed reporters.

Sharon was then asked whether construction in Ariel was still possible, the Cabinet official said. Sharon responded that there was no need to make a big deal every time a building permit is issued. "We just build," the Cabinet official quoted Sharon as saying.

Palestinians charge that Jewish settlements in the West Bank and Gaza Strip are a major obstacle to a peace agreement because they encroach on land the Palestinians claim for a state.

Settlers and their backers don't dispute that, saying that one of their main goals is to prevent the creation of a Palestinian state.

Last week, in a daylong confrontation, Israeli soldiers tore down a settlement outpost in the West Bank, scuffling with hundreds of settlers. However, the Cabinet official said Sharon told the ministers that some of the outposts Israel is required to dismantle are necessary for security.

Sharon has said many times that he will not compromise over Israel's security, indicating that he will not carry out all the "road map" requirements over settlements. In the meantime, peace activists say settlers have put up eight new outposts to replace 11 removed so far.

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