NABLUS, West Bank ? Acting on a tip, Israeli troops ambushed Palestinian militants holed up in an underground tunnel Saturday, killing seven fugitives including the most-wanted man in the West Bank.

Army commanders said the killing of the fugitives was the main goal of a three-day operation to root out militants in the West Bank city of Nablus. Troops began withdrawing from the center of the city soon after the raid.

Soldiers had killed another militant during an earlier raid in Nablus, leaving the total toll eight dead militants for the day.

Israeli military officials called the raid in Nablus a great success. An army commander, who identified himself only as Lt. Col. Itzik, said the men killed in the ambush were the main targets of the operation.

Palestinian witnesses confirmed that troops began withdrawing from the city center, the casbah, but remained on the outskirts of the neighborhood.

Among the dead was Nayef Abu Sharkh, a leader in the Al Aqsa Martyrs’ Brigades. Palestinian and Israeli security sources said Abu Sharkh was Israel’s most-wanted militant in the West Bank.

Military officials said Abu Sharkh was responsible for a January 2003 double suicide bombing that killed 23 people in Tel Aviv and another in November 2002 that killed two people.

Meanwhile, Palestinian leader Yasser Arafat called for a cease-fire with Israel during the Olympic games in Greece, scheduled for Aug. 13-29. He made the offer at a lighting ceremony for an unofficial Olympic torch.

“I declare our respect and commitment for an Olympic truce,” Arafat said.

Israeli officials, who accuse Arafat of supporting militants, dismissed the offer as insincere.

Elsewhere, U.S. Mideast envoy William Burns met with Palestinian officials, seeking to build momentum for Israel’s planned withdrawal from the Gaza Strip.

“I stressed President Bush’s determination to do everything that the United States can to help seize the opportunity presented by the Israeli initiative,” Burns said after meeting Palestinian Prime Minister Ahmed Qureia.

Burns stressed that the Gaza pullback should advance the “road map” peace plan, which envisions a Palestinian state in Gaza and the West Bank.