President Yasser Arafat and his prime minister-designate planned to begin consultations on Friday on the appointment of a new cabinet representative of all Palestinian factions, including Hamas.

A Palestinian official said the cabinet, which they hope to present to parliament next week, is expected to include Hamas supporter Mousa el-Zabout and Salam Fayyad, the reformist finance minister who is a U.S. favorite and already in government.

Ahmed Qurie, named prime-minister designate after former Palestinian Prime Minister Mahmoud Abbas resigned in a power struggle with Arafat, emphasized the unification effort he intends to make, saying he would consult on cabinet appointments with all factions, "in Gaza and elsewhere."

"I want a government supported by the Palestinian people and the Palestinian leadership," he said after a meeting of Arafat's Fatah faction that set the criteria of the new government and left the naming of the 24 ministers to Arafat and Qurie.

As a result, Arafat, who Washington hoped to sideline, will play a major role in shaping the next government.

President Bush said on Thursday that Arafat's failed leadership was responsible for the stalling of his Middle East peace plan, remarks a Palestinian Labour Minister Ghassan el-Khatib said were "not constructive."

Israel, which threatened to "remove" Arafat after suicide bombings last week that killed 15 people, has said it will not negotiate with a cabinet associated with the Palestinian leader.

Israel accuses Arafat of fomenting violence in the Palestinian uprising for independence which began in September 2000, an accusation he denies.

U.N. ASSEMBLY TO HOLD EMERGENCY MEETING

The 191-nation U.N. General Assembly was due to meet in emergency session on Friday to take up a request by Arab nations for a vote on their demand that Israel stop threatening Arafat.

On Tuesday Washington vetoed a Palestinian, Arab-backed resolution in the 15-nation Security Council demanding that Israel neither deport nor threaten Arafat in any way.

In a show of the type of conflict Qurie will have to quell as prime minister, armed clashes broke out in Gaza between Hamas supporters and Palestinian security forces after the arrest of seven of the militant group's members suspected of kidnapping a policeman, a government statement and witnesses said.

Hamas supporters attacked police stations with stones and burned tires and cars after the forces rounded up the Hamas members. Witnesses reported an exchange of gunfire and hospital officials said 10 civilians and two policemen were wounded.

Early on Thursday, Israeli soldiers shot dead a senior member of Hamas's armed wing during a raid in the Nusseirat refugee camp in the central Gaza Strip.

Palestinian officials said the inclusion of a Hamas supporter in the cabinet would not be a first. The former leader of Hamas's military wing, Imad al-Fallouji, served as telecommunications minister for many years in previous governments.

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