HIGHLIGHTS: Attack Seen as Underlying Yahya's Failure to Convince Resistance Groups Stop Attacks against Israelis||Palestinians Say they See no Improvement in Situation under So-called 'Gaza First' Deal||Palestinian & Security Commanders to Hold More Talks Friday||Occupation Army Demolishes Resistance Leader's House in Tulkarm|| STORY: Israeli occupation soldiers killed two Palestinian Resistance men trying to infiltrate a Jewish settlement on Friday, hours after a Palestinian minister failed to convince Resistance groups to back an end to attacks against Israelis.

The two men, dressed in Israeli occupation army uniforms and armed with assault rifles and hand grenades, were shot dead in exchanges of fire with occupation troops after they were spotted near the security fence at the internationally illegal Kfar Darom settlement in the Gaza Strip

The al-Aqsa Martyrs Brigades Resistance group claimed responsibility for the attempted raid, a sign that efforts by Palestinian Interior Minister Abdel Razzak al-Yahya to persuade the groups to exercise restraint had failed.

ATTACK UNDERLINES YAHYA'S FAILURE

Hours earlier, Yahya failed to convince militant and nationalist factions to back an end to attacks against Israelis and accept Israel's plan to ease its military clampdown in the West Bank and Gaza Strip.

Yahya's talks with 13 factions, including the militant Hamas and Islamic Jihad groups, were intended to obtain broad backing for the plan to replace Israeli forces, which reoccupied many Palestinian-ruled areas, with Palestinian security forces.

The plan hammered out last weekend is seen as a first tentative step toward a full truce after more than 22 months of violence in which more than 2,000 people have been killed since a Palestinian uprising began after peace talks froze.

Israel pulled its patrols out of the West Bank city of Bethlehem on Tuesday as part of the deal, which it agreed to on the condition that Palestinian police take action to reduce violence against Israelis.

The occupation army claimed it had also begun taking unspecified steps "to ease humanitarian conditions" for Palestinians in the Gaza Strip, which was also covered by the agreement. But Palestinian residents said they had seen no signs of improvement.

Yahya, who is also in charge of the Palestinian security forces, made little headway in his efforts to convince militant groups to suspend attacks against Israel in the late night meeting in the Gaza Strip on Thursday.

"Yahya told us about his theory regarding the resistance and the uprising. He sees that the forms of the resistance do not serve the Palestinian cause. No one attending agreed with him," Mahmoud Zahar, a senior Hamas member, told Reuters.

Hamas and Islamic Jihad had rejected the "Gaza-Bethlehem First" plan and have vowed to continue attacks as part of what they call resisting the occupation. Both groups have vowed to destroy Israel and replace it with an Islamic state.

SECURITY COMMANDERS TO HOLD TALKS

Israeli and Palestinian security commanders were expected to hold a new round of talks later on Friday to extend the proposal to other areas, possibly the southern West Bank city of Hebron. Major-General Moshe Kaplinsky, the head of the occupation army's central command, was expected to meet Palestinian West Bank police chief Haj Ismail Jabber at an occupation army base near the West Bank city of Ramallah to discuss the plan.

OCCUPATION ARMY DEMOLISHES RESISGTANCE LEADER'S HOUSE

In the West Bank overnight, the occupation army said it demolished the house of a Hamas leader it says was behind a bomb attack at an Israeli banquet hall on the Jewish holiday of Passover on March 27 in which 29 people were killed.

An occupation army statement said that the occupation army Friday razed the Tulkarem house of Muhanned Shreim, a leader of the Ezzedine al-Qassam Brigades.

"The destruction of houses is a message to bombers and their accomplices to these terror acts that their deeds have a price," the occupation army said in a statement.

The occupation army has so far destroyed 25 houses where Resistance men linked to bloody attacks lived.

The Israeli daily, Yediot Aharanot, said Friday that a senior Hamas activist from Hebron, Juda Abu Sneinah, had given himself up to Israeli occupation forces for no apparent reason, a success Israeli officials chalked up to their new deterrent policy.

In addition, Israel has started distributing leaflets in the West Bank warning people against giving help to what it calls"terrorists," or face the consequences

PHOTO CAPTION

A relative kisses the body of Palestinian Medhat al-Yazij, 22, before the start of his funeral in Gaza, August 23, 2002. Israeli soldiers killed two armed Palestinians trying to infiltrate a Jewish settlement on Friday, hours after a Palestinian minister failed to convince militants to back an end to attacks against Israelis. The gunmen, dressed in Israeli army uniforms and armed with assault rifles and hand grenades, were shot dead in exchanges of fire with troops, after they were spotted near the security fence at the Kfar Darom settlement in the Gaza Strip, the army said. REUTERS/Oleg Popo