Israel kills militants

Israeli troops killed a top Islamic Jihad militant and another gunman from the group yesterday in the first deadly clash since a shock Hamas victory in a Palestinian election threw hopes for peace deeper into doubt.

Islamic Jihad said Nidal Abu Sa'da was a senior commander in the West Bank. A Palestinian security official called Abu Sa'da head of the group's armed wing in the occupied territory, a description sources in Islamic Jihad also initially gave.

An Israeli paramilitary border policeman was seriously wounded in the clash with gunmen suspected of involvement in a series of suicide bombings this year, the army said. The fighting, during what Israel said was an operation to arrest militants near the city of Jenin, raised tensions just a week after the parliamentary vote, in which Hamas trounced Palestinian President Mahmoud Abbas's long-dominant Fatah.

Islamic Jihad, a group that like Hamas is committed to Israel's destruction, urged Hamas and other factions to step up attacks on the Jewish state in response to the raid. Hamas has largely observed a ceasefire for nearly a year.

Israel has called for a boycott of any Palestinian government that includes Hamas, and said it expected to suspend monthly tax payments to the cash-strapped Palestinian Authority, a severe financial blow.

Israel collects customs revenue on behalf of the Palestinians and hands it over to the governing Palestinian Authority each month.

The next payment is due today, and was expected to total about $55 million. The salaries of 140,000 Palestinians depend largely on these funds, though Hamas may be able to find alternative sources of funding in the Arab world.

In a bid to keep aid flowing, Hamas leaders have suggested they might not have representatives in the government but rather put unaffiliated technocrats in the cabinet.