HIGHLIGHTS: An Israeli Assassination Squad Kills Brother of Jailed Resistance Leader, Ahmad Saadat||Eyewitnesses Refute Israeli Claims Saadat Fired First||Attacks & Counter Attacks Underline Fragility of 'Gaza First' Agreement|| STORY: Israeli tanks and infantry moved into Khan Yunes in the south of the Gaza Strip, a Palestinian security source said, as violence erupted again after Israel left Bethlehem in a key test of confidence-building measures.

The Israeli occupation forces advanced early Wednesday with the tanks firing cannon and machine guns at houses, many in ruins, in the Palestinian town opposite the internationally illegal Gush Katif Jewish settlement block.

More than 20 armoured vehicles took part in the operation, with helicopters flying overhead.

The occupation army said in a statement: "The army has undertaken a search operation in the suburbs of Khan Yunes after an outbreak of attacks in the sector." It recalled that an Israeli soldier was killed on Tuesday morning near the Neve Dekalim settlement by a Palestinian sniper hiding in Khan Yunes.

The Ezzedin al-Qassam Brigades, the armed branch of the Islamic Hamas movement, claimed the attack which was followed by an exchange of fire in which a young Palestinian was killed.

The Israeli occupation army was ordered to "destroy abandoned houses that are used as shelter or as firing positions" by armed Palestinians, the statement said.

SAADAT'S BROTHER ASSASSINATED

An Israeli assassination squad shot and killed the brother of a Palestinian Resistance leader, as violence marred the first day of a security arrangement designed to lead to a truce after nearly two years of fighting.

In the Gaza Strip, a Hamas sniper killed an Israeli soldier guarding a Jewish settlement, and the Palestinian Resistance group said it would undermine the security deal. Israeli occupation soldiers later killed a 15-year-old Palestinian boy in the same area after Israel sent attack helicopters to search for the sniper.

Under the deal, Palestinian police patrolled the West Bank town of Bethlehem for the first time in more than two months after Israel withdrew its troops. Israel is also to turn the Gaza Strip over to Palestinian security and pledges further steps to ease restrictions if violence is halted.

EYE WITNESSES REFUTE ISRAELI CLAIMS SAADAT SHOT AT THEM FIRST

In Ramallah, an Israeli assassination squad disguised as Arabs shot and killed Mohammed Saadat, brother of Ahmed Saadat, leader of the Popular Front for the Liberation of Palestine.

Minutes after the occupation soldiers stormed the house, Mohammed Saadat's bullet-riddled body lay on the ground behind the building. Angry neighbors and relatives shouted and threw rocks at the Israelis.

In a statement, the Israeli occupation army said the Israelis intended to arrest Saadat, but he opened fire on them, wounding two soldiers, and other soldiers killed him. The statement said Saadat was an "active member" of the PFLP.

Eye witnesses refuted Israeli claims adding that he was not armed and he had no political affiliations.

Ahmed Saadat has been in Palestinian custody since May 1, part of a deal that ended a 34-day siege of Palestinian leader Yasser Arafat's Ramallah headquarters. Israel charges he planned the assassination of Israeli Tourism Minister Rehavam Zeevi on Oct. 17, retaliation for Israel's killing of Saadat's predecessor, Mustafa Zibri, on July 27, 2001.

West Bank security chief Zuhair Manasra told Israel TV, "A continuation of the Israeli assassinations will bring about the collapse of the agreement" to restore calm to the West Bank, starting with Bethlehem and Gaza.

BETHLEHEM FREED BUT SIX OTHER CITIES REMAIN UNDER CURFEW

Bethlehem's Palestinians ventured out onto their streets without looking for Israeli soldiers for the first time since June.

Holding the hand of his 7-year-old daughter Suad, Ali Faraj, 32, strolled past shops, some open for the first time in weeks.

Six of the other eight main Palestinian towns and cities are still under Israeli control, after a large-scale invasion in mid-June that followed back-to-back Resistance bomb attacks in Jerusalem. The Israelis say that if Palestinian security prevents terror attacks in Bethlehem and Gaza, Israel will ease restrictions in the other West Bank locations.

IRAQ DONATES 25,000 DOLLARS TO VICTIMS OF ISRAELI DEMOLITION POLICY

In an interview with CBS News Tuesday, Iraqi Deputy Prime Minister Tareq Aziz defended Iraq's practice of paying the families of Palestinian Resistance bombers.

"These are heroes who are struggling to liberate the occupied territories," he said. "We respect them and so if we have any possibility to support their families we will do it and we will do it with the conviction that what we are doing is correct."

OCCUPATION TROOPS RAID TULKARM REFUGEE CAMP

In the West Bank, Israeli forces swept through a refugee camp next to the town of Tulkarem, killing a Resistance man in an exchange of fire. Charging that there was a "terrorist infrastructure" in the camp. The occupation army said 15 Palestinians were arrested in the camp and the town. Thirteen Palestinians were arrested in other parts of the West Bank.

ATTACKS & COUNTER ATTACKS UNDERLINE FRAGILITY OF 'GAZA FIRST' AGREEMENT

Visiting a crossing point between Israel and Gaza, Israeli Defense Minister Binyamin Ben-Eliezer called on the Palestinians to take action against Resistance activists who fire mortar shells at Jewish settlements in Gaza - and to find the sniper who killed the Israeli soldier.

"I hope they will catch those responsible quickly," he said. "If they (the Palestinians) want to live in peace and prosperity, if they want us to open our gates so they can work in Israel, if they want to exist in a different way, it's up to them."

Hamas said it would try to torpedo any truce. "The security the Zionists are seeking through the `Gaza first' plan is not going to be achieved," said a Hamas leaflet in which the group claimed responsibility for killing the soldier.

PHOTO CAPTION

(Top: L) An Israeli occupation soldier guards detained Palestinians in the old town of the West Bank city of Hebron, August 20, 2002. (Nayef Hashlamoun/Reuters)

(Top: R) A Palestinian man looks through the ambulance window at the body of Mohammed Saadat in the West Bank town of Ramallah Tuesday Aug. 20, 2002. Israeli undercover soldiers shot and killed Saadat, the brother of a Palestinian leader on Tuesday, one of the violent incidents that marred the first day of a test designed to lead to a truce after nearly two years of fighting. (AP Photo/Nasser Nasser)
- Aug 20 2:32 PM ET

(Bottom: L) Palestinian policemen inspect Palestinians vehicles on a road adjacent to Dugit Jewish settlement in the northern Gaza Strip, August 20, 2002. The action comes after Palestinians and Israelis struck a deal to ease Israel's military grip on Gaza Strip and Bethlehem. REUTERS/Oleg Popov
- Aug 20 8:18 AM ET

(Bottom: R) Four paintings commemorating Palestinian Resistance men who were killed in Palestinian-Israeli violence during the Al-Aqsa Intefadeh are posted outside an elementary school in the Sheikh Radwan neighborhood of Gaza City in the Gaza Strip Tuesday Aug. 20, 2002. (AP Photo/Jacqueline Larma)
- Aug 20 1:25 PM