Two Palestinian gunmen killed an Israeli yesterday at an industrial zone on the Gaza Strip border.
The gunmen were shot dead by Israeli security personnel.
Al-Aqsa Martyrs Brigades, an armed group in Palestinian leader Yasser Arafat's Fatah faction, claimed responsibility for what it called a "martyrdom operation" at the Erez border crossing.
At least two other Israelis were wounded in the early morning clash, an Israeli security source said.
Since a woman suicide bomber from the Islamic group Hamas killed four people at Erez last month, the Israeli military has stepped up supervision over some 3,000 Palestinian workers who flock to the crossing every day.
No immediate comment was available from the military, but the Palestinian workers were sent home after the clash.
Witnesses said they heard firing in the area after the clash and saw troops searching a nearby sewage canal.
Palestinian security sources said the gunmen were believed to have used the canal to infiltrate the industrial zone.
Arafat told a meeting of Fatah on Wednesday he would push again for peace with Israel and hold internal elections to promote reform.
On Tuesday, Israeli Prime Minister Ariel Sharon seemed to rule out talks with the present Palestinian leadership by calling it one of "murder and lies."
But on Wednesday aides to Sharon and Palestinian Prime Minister Ahmed Qureia met again to try to set up a meeting between the two and said the result was positive.
Fatah's Revolutionary Council, a key decision-making body, met for the first time in three years to head off disintegration marked by mass rank-and-file resignations over the dominant old guard's alleged misrule and armed anarchy in the streets.
Participants said a possible dissolution of the al-Aqsa Martyrs Brigades, which has been behind suicide bombings against Israelis, was not discussed but could come up in a reform debate set for yesterday and today.
Qureia told the meeting he was under a lot of US, European and Arab government pressure to hold talks with Sharon and said "maybe I will meet him in the coming days." He did not elaborate.
Qureia, a moderate, said Palestinian security services must crack down on growing lawlessness perpetrated by militia groups, some of them spin-offs from Fatah.
But Qureia's efforts to take charge of security to rein in militant violence have been blocked by Arafat and his calls for order have been disregarded.
Most Fatah leaders privately favor dismantling the al-Aqsa Martyrs Brigades, a jumble of armed groups in Fatah that have flouted policy banning suicide attacks and confining resistance to Israeli-occupied land where Palestinians seek statehood.
Some officials suspect the crisis in Fatah could destroy a movement that has spearheaded the Palestinian cause since the 1960s.
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