Car bomb escalates tensions in Mideast

JERUSALEM (AP) - A thunderous car bomb killed two Israelis near a crowded Jerusalem market yesterday, escalating tensions as Israeli and Palestinian leaders put off a truce announcement meant to end five weeks of fighting.

Islamic militants claimed responsibility for the blast, which killed the daughter of a right-wing Israeli political leader. Elsewhere, Palestinian areas were again aflame, with two Palestinians killed and at least 80 injured in the West Bank, doctors and rescue workers said.

The violence endangered - and may have scuttled - the latest in a series of cease-fire agreements.

Israeli Prime Minister Ehud Barak and Palestinian leader Yasser Arafat initially planned to simultaneously declare a truce at 2 p.m. The announcements were delayed with the expectation they would come a few hours later.

But shortly after 3 p.m., a Mazda car loaded with explosives detonated on a narrow residential street less than 200 yards from the congested Mahane Yehuda market.

Flames leaped high into the air, sending up huge black plumes of black smoke as wailing ambulances converged on the working-class area lined with old stone apartment buildings. Eleven people - including four children - were slightly injured in addition to the two killed.

Police identified the dead as Hanan Levy and Ayelet Hashahar-Levy. They were not related.

Ayelet Hashahar-Levy was the daughter of Yitzhak Levy, leader of the National Religious Party.

Yitzhak Levy has served as a minister in several Israeli governments. He left his post in Barak's government because of disagreements over the peace process.

His daughter had just moved to Jerusalem and was bringing her belongings to a house in the area at the time of the explosion, police said. One witness said he tried to pull her from the flames.

"I saw her on the ground and her legs had been blown off," Yaakov Hassoum said. "I hoped she was alive, but she was dead."

Hundreds of onlookers clogged the streets as policemen pushed the crowd back. Some young Israelis chanted, "Death to Arabs" and "We want revenge."

A group calling itself the military wing of the Islamic Jihad claimed responsibility for the attack. In a statement, the group said the bombing was carried out "in reply to the enemy's crimes against our

Palestinian people" and promised more attacks.