Israeli occupation troops killed a Hamas activist in a West Bank raid Tuesday as part of its new offensive against the Islamic resistance group, and arrested three Palestinian women suspected of planning to carry out resistance bombings. Hamas is threatening to unleash more attacks on Israelis in retaliation for the deaths of eight members of its military wing in the past three days. On Monday, a top Hamas fugitive was killed in an ambush by Israeli undercover occupation troops.

Despite the tensions, Israeli Prime Minister Ariel Sharon met over the weekend with Palestinian Finance Minister Salam Fayad, his second meeting with a senior Palestinian official in recent days after a long freeze.

Fayad said the two discussed financial issues, including the transfer of funds to the Palestinians. A senior Sharon aide has also been holding truce talks with the Palestinian interior minister.

In London, Palestinian and Israeli delegations are attending talks this week on Palestinian government reform and international aid to the Palestinian Authority .

The Palestinians will request 1.5 billion dlrs in assistance from international donors through April 2004, Palestinian Planning Minister Nabil Shaath told The Associated Press from London.

In other developments, Yasser Arafat's deputy in the PLO, Mahmoud Abbas, said Monday that if offered the post of prime minister, he would seriously consider it. Abbas is considered the front-runner for the job and has the support of Arafat's Fatah movement, while Fayad has also been mentioned as a contender.

Arafat agreed last week, under intense international pressure, to create the post, provided this is approved by the PLO and the legislature.

Mideast mediators want Arafat to hand over the running of the government to a prime minister.

However, the tentative reform efforts and cease-fire contacts were overshadowed by the intensifying confrontation between Israel and Hamas.

On Tuesday, occupation troops killed a Hamas activist outside his home in the West Bank town of Yatta. The man was armed and was shot dead when he tried to flee, the army said. Palestinians identified the Hamas activist as Mohammed Mora, 27.

The army also said it has arrested three Palestinian women on suspicion they planned to carry out resistance bombings.

No explosives were found on them, and the army declined to elaborate. The women are from the towns of Beit Jalla and Beit Sahour and the Dheisheh refugee camp, all just south of Jerusalem, the army said.

The vast majority of the more than 80 resistance bombers in the past 29 months of fighting have been men, most from Hamas and the Islamic Jihad group.

Israel has launched an offensive against the Hamas military wing in response to a weekend bomb attack on an Israeli tank in which four occupation soldiers were killed.

Israeli occupation troops are reportedly poised for a major strike against Hamas in Gaza, but will stop short of reoccupying the crowded strip of more than 1 million Palestinians.

On Sunday, six Hamas activists were killed in a mysterious explosion in Gaza, though it remains unclear whether they had detonated a bomb prematurely or whether the blast was triggered by Israel.

On Monday, a top Hamas fugitive, Riyad Abu Zeid, was killed in an ambush by Israeli undercover occupation troops. The commandos hid in a vegetable trucked parked along Gaza's coastal road, and opened fire when Abu Zeid's black Honda approached.

Tens of thousands attended funerals of the Hamas activists in Gaza on Monday, one of the largest turnouts ever, and Hamas said it would step up attacks on Israel. "The crime against our fighters will not pass without ... punishment from Hamas and the Palestinian people," said Abdel Aziz Rantisi, a senior Hamas figure.

PHOTO CAPTION

Palestinian children play on top of the remains of two buildings destroyed by Israeli occupation troops early Tuesday in the north of Rafah refugee camp southern Gaza strip Tuesday, Feb.18, 2003. According to the army, the buildings were used as a lab and as storage facility for explosives. (AP Photo/Khalil Hamr