The European Union today threatened to cut off aid to a Hamas-led Palestinian government “unless it seeks peace by peaceful means,” in its strongest signal on the issue to date.

An explosion in a car in Gaza City today killed the top commander of the Islamic Jihad’s military wing in the Gaza Strip, the Palestinian Interior Ministry said.

Iran today offered to help finance a Palestinian Authority run by the Hamas militant group, state radio reported.

US Secretary of State Condoleezza Rice must try to reconcile dissonant elements of the Bush administration policy in the Middle East this week - defending the push for Palestinian elections won by proclaimed terrorists while appealing for help from the kind of autocratic regimes she says have had their day.

Israel’s Cabinet today approved an immediate freeze on the transfer of hundreds of millions of dollars to the Palestinian Authority, in a first response to Hamas militants’ takeover of the Palestinian parliament.

ISRAEL yesterday protested against a plan by Russia to have talks in Moscow with Hamas, the Islamic militant group that swept recent Palestinian elections and whose charter calls for Israel’s destruction.

ACTING Israeli Prime Minister Ehud Olmert said yesterday that Israel plans to withdraw from some of the territory it holds on the West Bank.

A LEADING Iranian newspaper is to hold a competition for cartoons on the Holocaust in what it calls a test of whether the West extends the principle of freedom of expression to the Nazi genocide as it did to the caricatures of the Prophet Mohammed.

The West’s publication of the Prophet Mohammed cartoons was an Israeli conspiracy motivated by anger over Hamas’ win in the Palestinian elections, Iran’s supreme leader, Ayatollah Ali Khamenei, said today.

Microsoft’s Bill Gates, a darling of the annual meeting of government and business leaders meeting in a Swiss ski resort, was returning today to help beef up global efforts to fight tuberculosis.

Asian governments called on Hamas to renounce violence and work toward peace today after its victory in Palestinian elections, while hard-line Muslim groups hailed the result as a reward for decades of armed resistance against Israel.

ISRAELI officials convened emergency meetings yesterday to decide how to respond to the militant Hamas group’s upset victory in Palestinian elections, maintaining an outward silence while privately blaming each other for the upheaval.

Secretary of State Condoleeza Rice today said the US position on Hamas as a terrorist organisation had not changed, despite the militant group’s stunning victory in Palestinian elections.

Former US President Jimmy Carter said today that he hoped that the Hamas Islamic group would act “responsibly” now that it appears to have been elected to power in Palestinian elections.

Defence Minister Shaul Mofaz yesterday hinted that Israel is preparing for military action to stop Iran’s nuclear program, but said international diplomacy must be the first course of action.

A SUICIDE bomber blew himself up in a crowded pedestrian mall near Tel Aviv's old central bus station yesterday, and at least 20 people were wounded, police said.

THE future of the Middle East hung in the balance last night as Israeli Prime Minister Ariel Sharon fought for life after emergency brain surgery for his massive stroke.

British aid worker Kate Burton and her parents were whisked out of the Gaza Strip by diplomats early today, hours after being released by Palestinian gunmen who abducted the family.

Hamas would consider holding negotiations with Israel, a top leader of the Islamic militant group said in an interview broadcast today, indicating that the hardline group was moderating its tone ahead of Palestinian parliamentary elections.

The Israeli military has arrested dozens of Hamas candidates for parliament and local councils as part of its new offensive against the Islamic militant group.

The Palestinian Election Commission announced today that parliamentary elections cannot be held on July 17, as planned, because it needs more time to prepare.

Palestinian leader Mahmoud Abbas said today he expects Hamas to hand in its weapons after Palestinian elections this summer, but he stopped short of threatening to disarm the Islamic militants by force.

Ramit Plushnick-Masti, Jerusalem

An invitation for White House talks was winging its way to Mahmoud Abbas tonight after his landslide victory in the Palestinian president election.

Interim Palestinian leader Mahmoud Abbas is emerging as the front-runner in presidential elections, with an 18-point lead over jailed uprising leader Marwan Barghouti, according to the first poll on how Palestinians will vote on January 9.

The Palestinian elections provide an opportunity to revive the Mideast peace process, UN Secretary-General Kofi Annan said today, adding that Israel is ready for such a step.

ISRAELI leaders told US Secretary of State Colin Powell yesterday that they will do their utmost to allow Palestinian elections to take place, including easing travel restrictions in the West Bank and Gaza Strip.

US Secretary of State Colin Powell made a new push toward Mideast peace today, promising Palestinians full support for their elections to replace Yasser Arafat and receiving Israeli assurances of a smooth path to the ballot box.

Outgoing US Secretary of State Colin Powell told Israel’s prime minister today that the United States wanted to take advantage of new opportunities in the Middle East, and that it supported Palestinian elections set for January 9.

An Israeli military court has backed the expulsion of three Palestinian relatives of suspected terrorists from the West Bank to Gaza.