HIGHLIGHTS: Tanks Seen Moving Towards Ramallah||'Bombing Underscores Importance of PA Reforms,' Condoleezza Rice||Fate of Palestinian Exiles Stranded in Cyprus Still Uncertain||STORY: Palestinians waited anxiously for possible retaliation by the Israeli military on Monday after a Palestinian bomber disguised as an Israeli soldier killed three people in a vegetable market in the Israeli coastal city of Netanya. (Read photo caption)

The Palestinian Authority issued a statement condemning "the terrorist operation that targeted Israeli civilians in Netanya."
The radical Popular Front for the Liberation of Palestine said it carried out the attack, in which more than 35 people were also wounded.

Early in May, Israel called off a Gaza Strip offensive planned following a Palestinian bombing that killed 15 Israelis near Tel Aviv.

NETANYA UNDERSCORES IMPORTANCE OF PA REFORMS

Palestinian officials have been pondering elections and reform in the face of internal, international and Israeli demands for a restructuring of the Palestinian Authority and its security forces.

Israel has demanded reforms as a condition for resuming peace negotiations stalled since 2000.

U.S. national security adviser Condoleezza Rice said in Washington the Netanya attack "underscores the importance of reform of the Palestinian Authority...of getting a unified security apparatus that can be accountable and can deal with issues of terrorism and breaking up terrorist networks."

FATE OF EXILES STILL UNCERTAIN

Spain has insisted it brokered a deal to distribute a group of exiled Palestinian fighters but several European Union countries due to take in the men issued contradictory statements.

Cyprus, where the 13 men are currently staying, denied it was willing to keep one of the exiles much longer and Belgium said it was too early to say it had agreed to take one of the gunmen.

The Egyptian Foreign Minister Ahmed Maher and Cypriot Foreign Minister Loannis Cassoulides said there was no final decision on the departure of the 13 men.

However, they said they expected a decision would be made by Tuesday, and the exiled men would travel to their new homes shortly after that.

PHOTO CAPTION

Israeli rescue workers search the scene of a Palestinian bombing in the Israeli city of Netanya May 19, 2002. A Resistance bomber blew himself up in the vegetable market, killing at least one and wounding more than 35 others, police said. (Havakuk Levison/Reuters)