9.40am UPDATE
TEL AVIV - A Palestinian teenager blew himself up in an open-air market in Tel Aviv on Monday, killing three people in a show of strength by militants three days after Yasser Arafat was airlifted to France for urgent medical care.
The suicide attack came as Israel's parliament debated another part of Prime Minister Ariel Sharon's contentious plan to pull out of occupied Gaza in 2005, opposed by many in his rightist Likud party as "a prize to Palestinian terrorism".
"A male suicide bomber blew himself up at a vegetable stall," Tel Aviv police chief David Tzur told reporters. There were four dead including the bomber, a police spokesman said.
Emergency services said 32 people were wounded by the blast in Carmel market, which knocked over vegetable and fruit stalls and splattered blood over the narrow enclosed street.
The Popular Front for the Liberation of Palestine (PFLP), a small armed group in Arafat's Palestine Liberation Organisation (PLO), claimed responsibility for the blast.
Amer Abdel Rahim, a 16-year-old high school dropout from a West Bank refugee camp near Nablus known as a militant hotbed, carried out the attack, the PFLP and neighbours said.
Hours later, Israeli troops raided Nablus, killing three Palestinians, medics said. The casualties' identities were not immediately clear. Military sources said troops opened fire at gunmen, but put the number of Palestinians killed at two.
The bombing posed a challenge to veteran moderates presiding over Palestinian institutions in Arafat's absence who have called in the past for a ceasefire to revive peace moves with Israel aimed at Palestinian statehood.
The bomber struck on the eve of the US election, where a neck-and-neck race between President George W Bush and Democratic challenger Senator John Kerry, and Washington's preoccupation with Iraq, have left a diplomatic vacuum in the long Israeli-Palestinian conflict.
Israel accuses Arafat, 75, an ex-guerrilla who has dominated Palestinian politics for decades, of fomenting militant attacks in a 4-year-old revolt. But he denies it and phoned an aide from his hospital bed to denounce Monday's bombing, the aide said.
"He condemned the attack in Tel Aviv and said he condemns killings of civilians on both sides," Nabil Abu Rdainah said.
"Such attacks do not serve our cause amid such a difficult situation," said Palestinian Prime Minister Ahmed Qurie, a moderate, alluding to Arafat's hospitalisation near Paris.
Sharon dismissed such gestures. "The bombing proves there is no change in the Palestinian Authority (in Arafat's absence). Until they take substantive steps to eliminate terror, carry out reforms and stop incitement, Israel will continue with its policy," he said at a meeting of Likud parliamentarians.
Leila Shahid, the Palestinian envoy to France, said on Monday Arafat was recovering but remained exhausted due to diarrhoea and vomiting. But she said no blood cancer, tumours or other grave illnesses had been found in tests.
French medical sources have cautioned that no ailment could be ruled out until doctors completed examinations, expected around mid-week. Arafat had suffered severe stomach pains and doctors initially spoke of possible leukaemia.
It was the first militant attack inside Israel since Arafat was evacuated from his half-demolished West Bank compound where Israel had confined him for more than two and a half years.
Sharon's government has ruled out any return to peace talks unless Palestinian leaders disarm militants and reiterated on Sunday it foresaw no chance of this with Arafat still in power.
Officials in the PLO and Arafat's Fatah movement have said they expect his full recovery and return to the helm.
Israel's parliament, which approved "disengagement" in principle on October 26 after a furious debate, on Monday started discussing a bill on compensating 8000 Jewish settlers to be uprooted from among 1.3 million Palestinians in Gaza.
A few dozen foes of Sharon's agenda rallied at the bombing scene, one holding up a sign saying: "Victims of Disengagement".
- REUTERS
Herald Feature: The Middle East
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Suicide bomber kills three in Israel with Arafat abroad
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