Israel called up reservists on Thursday and Palestinians steeled themselves for possible attack after the Israeli government gave the army the go-ahead to hit back for a Resistance bombing this week. Israel gave no word on when or where it might launch any action, but Palestinian leaders urged it to avoid a strong response such as its recent devastating West Bank offensive.

Tuesday's bombing, which killed 15 Israelis in a club near Tel Aviv, threatened to trigger a new phase of violence and compounded obstacles to arranging an international conference on how to end the Israeli-Palestinian conflict raging since September 2000.

The 38-day Israeli siege of Bethlehem's Church of the Nativity went on despite the efforts of negotiators. The latest solution involved a European Union agreement for various European countries to take the wanted Palestinians inside the shrine, an Italian government source in Rome said.

Cyprus said Thursday night it had agreed to take for a few days 13 wanted Palestinian militants holed up in the church but there were still issues to be resolved before they left the shrine, revered by Christians as the birthplace of Jesus.

PHOTO CAPTION
Manger square in front of the Church of the Nativity is deserted May 9, 2002. European Union diplomats and the government of Cyprus said a deal had been reached to end the standoff between Palestinian militants in Bethlehem's Church of the Nativity and besieging Israeli troops. ' (Radu Sigheti/Re