The attack came in response to Tuesday nights attacks in which two Hamas fighters entered into a Jewish settlement killing two Isrealis and wounding 15 others. Israeli forces shelled farmland in the Gaza Strip within hours of the initial attack killing six Palestinians. It was explained as a commemoration of the latest Palestinian intifada, or uprising, which began a year ago.

The two gunmen had crept into the Jewish settlement of Alei Sinai and opened fire on the populace, killing a 19-year-old woman and her 20-year-old boyfriend as well as wounding many others, however, they were both killed before they could escape.

As part of reprisals, Israeli tanks and naval gunboats destroyed seven Palestinian security posts near the northern town of Beit Lahia, then pushed almost two miles into Palestinian-controlled territory, demolishing farmland as they went.

In the latest counter-response, two Israeli women were injured when Palestinian gunmen opened into a crowd of worshippers at the Tomb of the Patriarchs, a site holy to both Jews and Muslims.

The upheaval could not have come at a worse time for the United States. It is bound to complicate matters with Arab leaders, whose support they need for a global coalition against terrorism. Many Arab nations urge the United States to restrain Israel or face losing their support.

Arafat's Palestinian Authority issued a statement denouncing the infiltration, calling it ``a violation of the cease-fire'' and pledging to take legal action against those responsible for it. However, Sharon blamed Arafat, charging that he ``has established a coalition of terror.'' In a speech in Jerusalem, Sharon complained that he was under world pressure to allow Foreign Minister Shimon Peres to meet Arafat last Wednesday and declare a truce, but in return, he received ``terror and more terror and more terror.''

On Wednesday, Israel was due to continue lifting travel restrictions in the West Bank and Gaza as part of the truce plan, but the attack in Gaza threw that into doubt. Palestinians have charged that Israel has violated terms of the truce by not lifting more roadblocks. The travel restrictions have crippled the Palestinian economy and caused widespread hardship.