Jerusalem ? Palestinian leader Mahmoud Abbas, the leading contender to succeed Yasser Arafat, said Friday that Israeli Prime Minister Ariel Sharon’s hope of annexing West Bank settlements and keeping all of Jerusalem in a final peace deal is a disaster that could torpedo efforts to restart peace talks.

Abbas’ comments came as Israeli troops raided the Khan Younis refugee camp in retaliation for recent Palestinian mortar attacks, killing eight Palestinians, including at least five gunmen, in the deadliest day of fighting since Arafat’s death.

A Palestinian woman from the Abu Zarga family sits with her children at a makeshift shelter in a United Nations school after fleeing their home during an Israeli army operation in the Khan Younis refugee camp, southern Gaza Strip. The Israeli army moved into the camp after a week of mortar barrages and rocket attacks on nearby Israeli targets that killed a Thai worker in a Jewish settlement and injured 17 other people, including 11 soldiers.

The violence and the disagreement over a peace plan were reminders of the obstacles ahead despite the rare feeling of optimism that has swept the region since Arafat’s death, with both Israelis and Palestinians calling for new negotiations to end their conflict.

Israeli officials have promised to help ensure that Palestinian elections go smoothly, and Palestinian leaders have been working to persuade militants to halt attacks on Israel.

Israeli officials also had expressed support for a possible Middle East conference in Britain next year. But an Israeli official said Friday that Israel did not plan to attend because the meeting would deal with Palestinian issues, including internal reform and funding.

In a major policy speech Thursday, Sharon said his plan to withdraw from Gaza next year, coupled with Arafat’s Nov. 11 death, could turn 2005 into a “year of great opportunity.”

But Sharon also reiterated his determination to hold onto some large West Bank settlements and all of Jerusalem in a final peace deal. The Palestinians want all the West Bank, Gaza and East Jerusalem for a future state.

In a telephone interview from the Persian Gulf state of Qatar, Abbas called Sharon’s comments a “disaster.”