Yasser Arafat extended an olive branch to Prime Minister Ariel Sharon Wednesday, one day after the Israeli leader's resounding re-election on a wave of support for his hard line against a Palestinian uprising. The Palestinian president said he was willing to hold immediate talks with Sharon and was ready to call a general truce aimed at ending more than two years of conflict. Israel dismissed the offer as "duplicity and deception."

Arafat's comments in an Israeli television interview marked his first public reaction to a sweeping victory by Sharon's rightist Likud in Tuesday's general election -- an outcome, which other Palestinian officials said would cripple peace, hopes.

Israeli voters handed the center-left Labor Party its worst defeat, reflecting Israelis' fury at the party for having put its faith in Arafat to make peace.

Sharon grappled Wednesday with how to forge a lasting coalition. Labor quickly rejected his appeal to join a broad "unity" government, which he said was needed to confront the twin crises of a Palestinian revolt and possible war in the Gulf.

Sharon could be forced into an alliance with far-right and ultra nationalist parties that demand an even tougher approach to the Palestinians, a move that could put the prime minister at odds with Israel's chief ally, the United States.

The 74-year-old former general has consistently refused to meet Arafat, accusing him of fomenting violence against Israelis, and has demanded his removal before talks can resume.

Voters, shaken by resistance bombings that have killed hundreds of Israelis during a 28-month-old uprising for independence, gave Sharon an overwhelming endorsement of his tough military response to the Palestinians.

BUSH OFFERS CONGRATULATIONS

President Bush congratulated Sharon on his re-election and stressed Washington's position that Middle East peace should be pursued on the basis of security for Israel and independence for the Palestinians, the White House said.

Results showed Likud's parliamentary strength soaring to 37 seats, up from 19 in the outgoing 120-seat Knesset, as Israel's political pendulum swung dramatically right.

Labor, led by dovish Haifa mayor Amram Mitzna, fell to 19 seats from 25, the worst showing in its history.

Labour's former partner in peace moves, the leftist Meretz party, was shown winning six seats, down from 10. Yossi Sarid, a leading Israeli dove, resigned as Meretz chief Wednesday.

Further underscoring divisions, the upstart Shinui party swept into third place, with 15 seats, up from six, on a pledge to deny ultra-Orthodox Jewish parties their historical role as political power brokers able to demand state cash and benefits.

Israeli President Moshe Katzav was expected to ask Sharon to form a new government, a process expected to take weeks.
Sharon has 28 days to form a government but can be given up to 14 days more. If he fails, fresh elections could be called.

PALESTINIAN CRITICISM

"This is a heavy blow to a peaceful settlement," Palestinian Information Minister Yasser Abed Rabbo said.

Hamas, the main militant group behind resistance bombings, said Sharon's re-election signaled Israel's escalation of the conflict and vowed it would continue its fight.

MIXED ARAB REACTION

Syria called it a blow to peace efforts. But Egyptian President Hosni Mubarak phoned Sharon to congratulate him and the two agreed to meet after Sharon forms a new government, the Israeli leader's office said.

INTIFADHA CONFRONTATIONS FLARE UP IN GAZA

Violence flared in Gaza, where Israeli troops shot dead a 19-year-old Palestinian near the Internationally illegal Jewish settlement of Nahal Oz, hospital officials said.

Israeli occupation forces reinforcing sand barriers near the Rafah refugee camp came under fire from resistance men and shot back, wounding 21 people, witnesses and medics said.

Among the wounded were five people, including two children, who were in a home hit by a tank shell, witnesses said. Israeli occupation army sources said one their soldiers was moderately wounded.

In the West Bank, Palestinian resistance men ambushed a car outside the internationally illegal Jewish settlement of Ofra, wounding two Israelis, the occupation army said. At least 1,806 Palestinians and 698 Israelis have been killed since the revolt began in September 2000

PHOTO CAPTION

Palestinian President Yasser Arafat said January 29, 2003 he was willing to meet Israel's newly re-elected prime minister Ariel Sharon immediately and to return to negotiations to end more than two years of conflict. (Osama Silwadi/Re