The settlers and soldiers who rushed to their aid were struck down by heavy gunfire from a house overlooking a route Israelis call "worshippers' way" linking the divided West Bank city to the adjacent settlement of Kiryat Arba, the army said.

The Islamic Jihad group said it carried out the assault as payback for Israel's killing of one of its military leaders a week ago. Islamic Jihad gunmen in Gaza handed out sweets to youngsters and fired in the air to celebrate the Hebron attack.

Medical officials put the number of Israeli dead at 12 and said about 15 others were wounded in the ambush that raised the spectre of heavy retaliation by Israel's right-wing government.

It was the highest Israeli death toll in Hebron since a Palestinian uprising for statehood began in September 2000.

Local officials said two Palestinians were killed by Israeli fire on the house where the gunmen were believed to be holed up. Israel Radio said the two dead were thought to be gunmen.

The surge in Israeli-Palestinian violence, coinciding with a stormy campaign for an Israeli general election on January 28, is expected to delay international peacemaking and deepen regional uncertainty ahead of a possible US war on Iraq.

"There was shooting everywhere," Arik, an Israeli caught up in the ambush, told Army Radio. "I didn't know where to go. I fell flat on the ground... It was a slaughter."

Some 450 settlers, many armed and among the most extreme in the West Bank, live in enclaves alongside 130,000 Palestinians in Hebron, a flashpoint city divided into Israeli- and Palestinian-controlled sectors in an interim peace deal in 1997.

Ultra-nationalists in the caretaker cabinet that Prime Minister Ariel Sharon is leading in the run-up to the election count settlers as their core constituency and are likely to push for an iron-fist response to Friday's attack.

But political commentators said Israel was likely to delay retaliation until after the weekly cabinet meeting on Sunday.

"SABBATH MASSACRE"

"It's the Sabbath massacre," said Yoni Peled, deputy spokesman of the Israeli Foreign Ministry.

The shrine where the settlers had worshipped is the traditional burial place of biblical patriarchs holy to Jews and Muslims. In 1994, settler Baruch Goldstein shot dead dozens of Arab worshippers in a mosque on the site.

Captain Jacob Dallal, an army spokesman, said Jewish worshippers accompanied by a border police jeep had been walking back to Kiryat Arba from the Tomb of the Patriarchs when they came under fire about 500 meters (yards) from the settlement.

"There were a lot of casualties among the civilians," he said. "There were casualties among the border police. An Israeli army rescue force, including ambulances also came. They were also shot at, and there were more casualties."

Speaking by telephone to al-Jazeera satellite television, the head of Islamic Jihad, Ramadan Shallah, described the attack on the settlers as a "remarkable operation".

Settlers living on occupied land Palestinians want for a state of their own have been frequent targets for attack during an uprising in which at least 1,659 Palestinians and 639 Israelis have been killed.

The international community regards settlements as illegal. Israel disputes this.

An Islamic Jihad official in the Gaza Strip said the ambush was "a natural response to the Israeli assassination of martyr Iyad Sawalha".

Sawalha, head of the group's military wing in the northern West Bank, was shot dead by Israeli troops during a sweep for militants in the West Bank city of Jenin last Saturday. The army said he was killed after he threw grenades at the soldiers.

Javier Solana, the European Union's foreign policy chief, issued a statement condemning "in the strongest terms today's attack against Israeli civilians".

He said the bloodshed occurred just as "efforts were being made to end violence", an apparent reference to a peace "roadmap" charted by the United States, EU, Russia and the United Nations that has failed to jumpstart peacemaking.

Last month, Israeli forces staged a limited pullback from areas of Hebron reoccupied after Palestinian suicide bombings.

The latest bloodshed could herald a return in force to the Palestinian-ruled part of Hebron, where Israeli soldiers still hold a number of positions overlooking settler houses.

(China Daily November 16, 2002)