The United States is strongly condemning Tuesday's suicide bombing in Israel, which State Department officials say appeared aimed at torpedoing the planned Israeli withdrawal from Gaza and parts of the West Bank. Officials also say U.S. and Israeli officials are discussing new U.S. financial support for the disengagement process.

Officials here are acknowledging Israel's right to self-defense following the Netanya attack. But they also say they hope Israel will consider the consequences of retaliatory action, if any, and that they are hopeful the Gaza pullout proceeds on schedule next month.

Initial reports indicated the hardline Palestinian Islamic Jihad, or PIJ, faction may have been behind the suicide attack at the Netanya shopping mall, only the second incident of its kind since a truce was declared in the Israeli-Palestinian conflict five months ago.

A State Department official who spoke to reporters on grounds of anonymity described PIJ as the hardest-core of the Palestinian "rejectionist" camp, and noted the group had continued anti-Israeli attacks despite the truce.

Responding to the attack at a news briefing, acting State Department Spokesman Thomas Casey condemned the incident and suggested it was aimed at blocking progress toward peace in the region.

"This really is just another example of violence being perpetrated by those who oppose peace and who have nothing but a rejectionist agenda to sell. It's all the more reason why our focus has to be, and has to continue to be, on helping the Israelis and the Palestinians move forward on the 'road map' and helping them deal with the challenges that are out there," he said.

The White House also condemned the bombing in the strongest terms, saying there's no justification for the murder of innocent civilians.

Bush spokesman Scott McClellan urged the Palestinian Authority to take action to dismantle terrorist organizations to stop attacks like Tuesday's from happening in the first place.

The State Department meanwhile confirmed that U.S. and Israeli officials have held talks on possible new financial aid to Israel to help underwrite the costs of the Gaza withdrawal, including compensating uprooted Israeli settlers.

Israel is reported to be seeking more than $2 billion in U.S. grants and loan guarantees spread out over several years.

It would be in addition to the nearly three billion dollars in military and economic aid provided to Israel each year in what is the largest single U.S. foreign assistance program.

Spokesman Casey said in a meeting Monday with officials of the White House National Security Council and State Department, Israeli officials presented plans for relocating nearly nine thousand settlers from Gaza and several hundred from remote West Bank settlements to the Negev and Galilee regions of Israel proper.

Mr. Casey said discussions are at a preliminary stage and would continue. He said he was not prepared to announce any U.S. commitment to the Israeli plan but that the Bush administration would "see what it can do to be of assistance."