I think the incidents of the past few days obligate us to raise the threshold

General Mofaz

Responding to the hardline stance, the military wing of the Palestinian group Hamas said it was ready to begin a new wave of suicide bombings.

And in continued violence, two Palestinians have been shot dead by Israeli troops in separate incidents.

Hamas threat

In a statement sent to the Reuters news agency, the Izz el-Din al-Qassam Brigades of Hamas said it would launch suicide bombing attacks on the day Mr Sharon took office.

We will not remain in the status of self-defence for long - we will expand it to the status of attack

Hamas statement

''We will not remain in the status of self-defence for long. We will expand it to the status of attack,'' Hamas said.

In the latest violence, a 43-year-old Palestinian woman was killed by Israeli troops during a gun battle with Palestinians in the West Bank town of al-Bireh.

In the town of Nablus, a Palestinian youth was shot dead, Israel Radio reported.

Arafat reaction

Earlier, in an interview with Israel Radio, General Mofaz said Yasser Arafat's Palestinian Authority was becoming a terrorist entity.

"I think the incidents of the past few days obligate us to raise the threshold in our amount of action and our pressure on those same terrorists and those who send them," he said.

General Mofaz: Tough stance

On Thursday, a bomb explosion in a taxi, killing one Israeli and wounded nine others, including a pregnant woman.

The Israeli chief of staff said proposals for action would be presented once Prime Minister-elect Ariel Sharon formed a government.

But his comments were dismissed by Palestinian leader Yasser Arafat.

"What is there left to use - nuclear weapons?," he asked in an interview with the French AFP news agency.

Funerals

At least 415 people, mostly Arabs, have been killed over the last five months in the Palestinian uprising against Israeli occupation.

Thousands of Palestinians turned out for the funerals of four people, including boys nine and 13, killed on Friday in Gaza and the West Bank.

The mourners called for revenge and denounced Mr Sharon as a criminal.

Gunmen in the West Bank city of Ramallah fired into the air as they surrounded the bodies of two victims, carried in a procession through the town.

In Gaza City, some 5,000 Palestinians took to the streets to bury Mohammed Mahmoud Hellis, 13, who died after he was hit in the head by an Israeli bullet.