Bethlehem, West Bank ? Israel and the Palestinians held high-level talks Saturday to try to break the monthlong standoff at one of Christianity’s holiest shrines on the eve of Orthodox Christians’ Easter and Prime Minister Ariel Sharon’s departure for the United States.

Palestinians inside the Church of the Nativity, speaking on condition of anonymity, told The Associated Press by telephone that they had compiled a list of 123 names of those inside the church to give to the negotiators _ a possible prelude to hammering out the fate of the wanted Palestinian militants among them. The talks were taking place at an undisclosed location.

A European envoy took the names from the church and relayed them to the Palestinian negotiators, Palestinian officials said. The talks were taking place at an undisclosed location.

Demonstrating the continuing volatility of the situation as the standoff entered its second month, a militant inside the church compound was fatally wounded by an Israeli sniper, and the Israeli army said a Palestinian bomb-making factory was discovered only about 100 yards from the church compound.

The accelerated push to find a solution to the standoff in Bethlehem _ where the last major contingent of Israeli troops remains in the wake of a massive military offensive in the West Bank last month _ came as Sharon was preparing to leave Sunday for Washington to discuss President Bush’s plans for a Mideast peace conference.

Advisers to Sharon said he would propose that terms for a long-term interim deal with the Palestinians be arranged at a regional conference attended by Israel, the Palestinians, the United States and moderate Arab states.

Arab officials were cautious Saturday about committing themselves to the U.S.-sponsored conference, with hard-line Syria indicating it would not attend, and Egypt, a key Arab moderate, saying Israel had to withdraw first from Palestinian lands it recently occupied.

Plans for the peace conference were announced Thursday by Secretary of State Colin Powell, with the backing of the United Nations, the European Union and Russia. U.S. officials have suggested the conference will be held in June.

Israel Radio reported Saturday that the conference would take place in Turkey. A Turkish Foreign Ministry spokesman said Turkey had offered to hold it but was not aware the invitation had been accepted. Israeli officials were not immediately available for comment.

The gathering would be held at the level of foreign ministers, avoiding the issue of Palestinian leader Yasser Arafat’s attendance. Sharon has branded Arafat a terrorist and has said he does not consider him a partner in negotiations.

The Israeli army said the Palestinian fatally shot in Bethlehem was Halaf Najazeh, a wanted militant from Arafat’s Fatah movement. He was taken to an Israeli hospital, where he died, the army said.

More than 100 people, including about 30 Palestinian gunmen, are holed up inside the church, which is ringed by Israeli forces. The standoff, which began April 2, cast a pall over Orthodox Christian celebrations of Holy Week, which culminates with Easter on Sunday, a month after the holiday was celebrated under the Western church calendar.

Carrying out an ancient pre-Easter ritual, worshippers flocked to the Church of the Holy Sepulcher in Jerusalem for the lighting of the Holy Fire. The flame is hand-passed from one worshipper to another, and a lantern lighted from it was transported to Bethlehem, where Israeli soldiers allowed it to be passed to priests inside the Church of the Nativity.

The army announced that the transfer had taken place successfully “despite the difficult security situation.”

Throughout the deadlock, Israel has insisted that the armed men inside the church surrender or accept exile. Palestinian officials have demanded they be taken to the Gaza Strip.

About 100 yards from the church, a 14-year-old Palestinian boy was moderately wounded by an explosion, hospital officials said. A sign outside the building described it as a medical clinic, but Israeli troops who later searched the building said it was an explosives laboratory.

The army showed reporters at the scene bags of gunpowder and paraphernalia indicating support for the militant Hamas group, and a collapsed wall in the building and broken glass indicated an internal explosion.

In the Gaza Strip, a Palestinian security officer was killed at a central junction on Gaza’s main road, Palestinian hospital officials said. The Israeli military said troops shot and killed a Palestinian who jumped out of a car waiting at a roadblock and opened fire at Israeli troops.

Palestinian security officials said troops opened fire without provocation, killing the man. They identified him as Ramse Eid, 25.

Arafat, released from confinement at his West Bank headquarters in Ramallah this week, convened his Cabinet on Friday for the first time since Israel launched a military offensive in the West Bank on March 29, targeting Palestinian militants responsible for attacks on Israelis.

In a statement, the Palestinian Cabinet reiterated its condemnation of terrorist attacks. The Cabinet “rejects and condemns all operations against civilians, whether Palestinians or Israelis,” it said.

Arafat said he would discuss the regional conference with Arab leaders, but it was not clear whether he would attend a meeting of Arab League foreign ministers in Cairo next week. He has been confined to Ramallah since December, when Israel destroyed his helicopters in retaliation for Palestinian attacks on Israelis.

An Egyptian diplomat said the Egyptian foreign minister and President Hosni Mubarak’s top adviser will meet Arafat in Ramallah on Sunday. Foreign Minister Ahmed Maher and Osama el-Baz, Mubarak’s political adviser, will be the first Arab officials to meet Arafat since Israel ended its monthlong siege of his compound on Thursday.

The Egyptian officials will be flown aboard a Jordanian helicopter to the West Bank town of Ramallah for a two-hour meeting with Arafat, the diplomat told The Associated Press on condition of anonymity.

Arafat emerged Thursday from 34 days of virtual house arrest under a U.S.-brokered deal that saw six Palestinians _ including four connected to the slaying of the Israeli tourism minister _ jailed in a West Bank town under British and U.S. supervision.

Arab news reports had suggested that Arafat would be visiting Egypt early next week, but Israelis officials have hinted that if he leaves the Palestinian territories, a new wave of suicide attacks would prompt them to block his return.