Two Israelis have been shot and killed by a suspected Palestinian gunmen in an incident on the outskirts of Jerusalem. Eight Palestinians have been wounded in Israeli military action in the Gaza Strip.

The two Israelis were shot as they stood at military checkpoint early Tuesday morning on the Tunnel Road, a highway leading from Jerusalem to the West Bank town of Bethlehem. One man died on the scene, the other was pronounced dead when he arrived at a hospital. The gunman is believed to have fled the scene to the nearby Palestinian village of El Kahder. The Israeli military immediately clamped a curfew on the village and began a search for the shooter.

The Tunnel Road was built to provide a secure route to protect travelers moving between Jerusalem and the nearby group of Jewish settlements known as Gush Etzion. Since the Israeli-Palestinian violence erupted three-years ago the road has been the scene of several sniping incidents.

In the Gaza Strip, meanwhile, a gun battle erupted during an Israeli raid on the Rafah refugee camp. Witnesses said several dozen Israeli tanks drove into the camp drawing fire from local gunmen. The troops also demolished several buildings including the family home of a man whose 14-year-old son was killed by Israeli forces 10 days ago.

It is not immediately clear what affect the attack might have on current efforts now underway to establish a ceasefire. But Justice Minister Yosef Lapid told Army Radio after the shooting of the Israelis that talk of the cease-fire may have been premature. He said the shooting casts doubts on what he termed "the frankness" with which the new government of Palestinian Prime Minister Ahmed Qureia is prepared to fight terrorism.

Egyptian intelligence chief Omar Suleiman held talks Monday in Ramallah with Palestinian officials. Additional talks between Egyptian mediators and Palestinian militant leaders are planned to take place Wednesday in the Gaza Strip.

Militant leaders are to meet next week in Cairo for talks on a possible truce. Mr. Suleiman was reported to have told Palestinian leaders that he found Israeli officials receptive to the idea.

Speaking to leaders of the Italian Jewish community on Monday, Israeli Prime Minister Ariel Sharon said he would meet Mr. Qureia "in the coming days." It would be their first summit meeting since Mr. Qureia took office more than a month ago.