Jerusalem Israeli Prime Minister Ariel Sharon has turned down a Palestinian request to ease travel restrictions and also dismissed a pledge by Yasser Arafat to stamp out Palestinian "terrorist groups."
But Sharon has said he would again hold cease-fire talks soon with Palestinians.
Arafat, in a Sunday opinion piece in The New York Times, employed some of the strongest language he has ever used to denounce Palestinian militants who carry out bombings and shootings against Israeli civilians.
"These groups do not represent the Palestinian people or their legitimate aspirations for freedom," Arafat wrote. "They are terrorist organizations, and I am determined to put an end to their activities."
He also offered to search for "creative solutions" to the plight of Palestinian refugees, respecting Israel's concerns that their right of return would change the demographic balance and destroy its character as a Jewish state.
But even as the two leaders appeared to open the door at least a crack toward dialogue, Israeli helicopter gunships destroyed a metal workshop in Gaza, and Palestinians launched attacks against Jewish settlers in Gaza and the West Bank.
Sharon told Israeli television that Arafat's comments did not amount to any fundamental policy shift.
He said the Palestinian leader had not given up demands for the return of Palestinian war refugees. Arafat is also seeking traditionally Arab east Jerusalem for a Palestinian capital and wants Israel to withdraw to the borders existing before it captured the West Bank and Gaza in the 1967 Mideast war all dealbreakers to Sharon.
"He did not renounce the right of return," Sharon said. "He has not changed on the Jerusalem issue and he has not dropped the issue of the 1967 borders. Israel, if it wants to exist, cannot retreat to the 1967 borders."
But Sharon, who met last Wednesday with senior Palestinian leaders for the first time since coming to power almost a year ago, said he was prepared to meet again with the Palestinians when he returns from a meeting this week with President Bush.
"I decided to invite them in order to explain to them what they need to do" to revive peace talks, Sharon told Israeli television. "At the same time I was interested to hear what their requests were."
The Palestinians are seeking an easing of Israel's blockade of Palestinian towns and villages, an end to Israeli military incursions into Palestinian-ruled territory and a halt to Israel's targeted killings of suspected militants. They also want Arafat to be allowed leave his headquarters in the West Bank town of Ramallah, where he has been bottled up for the past two months.
A statement from Sharon's office said he flatly rejected those requests and told his visitors that such Israeli operations could end if the Palestinians themselves rooted out terrorism, adding that in the past, the lifting of roadblocks had immediately been followed by attacks on Israelis.
Sharon said Arafat would have to arrest the Palestinians responsible for the October assassination of Israeli Tourism Minister Rehavam Zeevi as well as those involved in what Israel says was a plot to smuggle a shipload of arms from Iran to the Palestinian Authority by sea.
The two leaders, bitter enemies for decades, have routinely exchanged harsh accusations throughout the Mideast conflict. Their comments Sunday came on the heels of high-level meetings between the two sides, and offered a glimmer of hope that the sides might be serious about ending 16 months of fighting.
But some critics interpreted the moves largely as public relations efforts by a pair of leaders seeking to polish their international standing.
Arafat has made several public statements condemning Palestinian violence against Israel in recent weeks, but Sunday's remarks were his toughest yet.
Bush's tough stance
Bush has taken an increasingly tough line with Arafat, particularly in the wake of the Sept. 11 terror attacks in the United States. The Bush administration has been weighing the possibility of cutting off contacts with Arafat, U.S. officials have said.
Arafat did not cite any "terrorist groups" by name, and several recent shootings and a bomb attack have been carried out by the Al Aqsa Brigades, which is part of Arafat's Fatah movement. Most of the suicide bombings that have killed dozens of Israelis were carried out by the Hamas and Islamic Jihad groups.
In Sunday violence among Palestinians, six policemen and two bystanders were wounded north of Gaza City in a fight between the officers and Palestinians suspected of planning to fire mortars at an Israeli settlement, Palestinian security sources said.
Two suspects were arrested, the sources said, while the remainder escaped, firing guns and hurling grenades at the police.
Palestinians said Israeli helicopters fired several missiles at a metal workshop in Jabalya, just north of Gaza city.