HIGHLIGHTS: Sharon's Knesset Speech Intended to Exploit Inter-Palestinian Tension||Inter-Palestinian Confrontations Erupt at Abayat Funeral||Arafat to Name New Cabinet in a Matter of Days||Dahlan Offers to Resign|| STORY: Occupation Forces have killed two Palestinian activists in Jenin as inter-Palestinian tension erupts during Abayat Funeral in Bethlehem. Before his departure for Washington, Israeli Prime Minister Ariel Sharon urged Palestinians on Monday to change their leaders, whom he denounced as "murderous gangs," and said he hoped for a turning point to end Middle East violence in the next year.

"To achieve peace, the regime of murder must be replaced with a regime of peace," he told parliament before talks with President Bush this week in Washington.

Sharon's remarks appeared designed to paint President Yasser Arafat as the villain before the talks, at which he will face pressure to show restraint and ease hardships on Palestinian civilians living under Israeli occupation army curfews and blockades.

His appeal for a change of leadership also seemed intended to exploit increasingly transparent divisions between Arafat's Fatah movement and the Islamic Resistance group Hamas over the handling of a two-year-old uprising for Palestinian statehood.

Tensions are high between Israel and the Palestinians following the killing of a Palestinian Resistance activist in a blast in a telephone booth near Bethlehem on Sunday which the Palestinians blamed on Israel, raising the specter of revenge attacks.

INTER-PALESTINIAN CONFRONTATIONS AT ABAYAT FUNERAL

Confrontations erupted at the funeral of Mohammed Abayat when mourners chased a critic of the Resistance group of which he was a member and then set upon journalists following them.

Tensions flared between Hamas and Fatah after clashes in the Gaza Strip. Thousands of Fatah supporters marched in Gaza on Monday warning Hamas not to undermine the Palestinian Authority.

JIHAD VOWS REVENGE FOR JENIN DEATHS

Near the West Bank town of Jenin, Israeli occupation troops shot dead two Palestinian Resistance activists, Palestinian security sources said. Islamic Jihad announced the deaths in Jenin and vowed revenge.

PALESTINIANS REJECT SHARON'S CHARGES

Palestinian cabinet minister Saeb Erekat rejected the charge that the Palestinians are led by murderous gangs, blamed Sharon for the violence and added: "Sharon should look in the mirror."

He described Sharon's calls for a leadership change as a "broken record" and said the Israeli prime minister wanted to bring "the situation to the point of no return."

Arafat has shown no sign of intending to step aside, and is widely expected to seek re-election in January.

He met his cabinet in the West Bank city of Ramallah to discuss his plans and aides said he was likely to name a new cabinet in a few days, meeting a key U.S. demand for reform.

DAHLAN RESIGNS

In another development, Mohammed Dahlan, Arafat's security adviser, offered his resignation, a Palestinian official said, speaking on condition of anonymity. Arafat did not respond, the official said. Dahlan is one of the most powerful figures in the Palestinian security services. Sources said he was hoping to be appointed Interior Minister.

PHOTO CAPTION

Mourners carry the body of Palestinian Resistance activist Mohammed Abayat prior to his funeral in the West Bank town of Bethlehem on Monday Oct. 14, 2002 (AP Photo/Andrew Medichini)
- Oct 14 9:24 AM ET