Meanwhile, the Israeli army staged an incursion several hundred meters (yards) into north Gaza earlier to level trees which it said had been used as cover to launch a Qassam rocket which landed in an industrial zone of Ashkelon, without causing any injuries.

Sharon later issued an ominous warning, saying he had ordered the army to take "all necessary steps" to prevent any further rockets from being fired.

Speaking after a meeting in occupied Jerusalem with a group of U.S. lawmakers, he accused Hamas of having targeted one of Israel's largest electrical power stations.

"Today a serious development occurred in the activities of Hamas, which fired at Ashkelon," Sharon said. "That is an escalation, and I have ordered the army to take all necessary steps to act against Hamas and stop this sort of operation."

Hamas relations with the Palestinian government now appear to be at an all-time low after six Islamic charities, including one founded by the movement's spiritual leader Sheikh Ahmed Yassin, had their accounts frozen.

Rantissi said the government had cracked "after pressure from the Americans and the Zionists". Palestinian information minister Nabil Amr denied that the move was specifically targeted at Hamas, saying all groups would be made to respect the law.

Speaking to journalists later in Ramallah, he condemned the escalation of Israeli military operations, which he said "aims to destroy the roadmap."

Asked about the truce, he said "we are committed to respecting it, but as you see, every day there are assassinations, arrests, murders and destruction."

But Rantissi said: "We cannot speak about a truce while aggression against the Palestinian people continues."

Israel also dismissed the appeal by Arafat, accusing him of urging militant factions to continue their attacks during the truce.

"The appeal by Arafat is totally irrelevant. What he says has no interest for us as during the so-called ceasefire he was pushing the terrorist organizations to carry out attacks against Israel," senior government spokesman Avi Pazner told AFP.

The roadmap -- sponsored by the United States, the European Union, the United Nations and Russia -- was launched in Jordan nearly three months ago but has made scant progress so far.

Russia's deputy foreign minister, Yuri Fedotov, held talks with Abbas here Thursday as well as with foreign minister Nabil Shaath as part of diplomatic efforts to save the project.

E.U. foreign policy chief Javier Solana was due to arrive in Israel on Friday ahead of expected talks with Sharon, Foreign Minister Silvan Shalom and Defense Minister Shaul Mofaz.

Meanwhile, in the West Bank town of Nablus, hospital sources said at least 13 Palestinians had been injured in clashes with Israeli forces.

Palestinians look at a dead donkey at the site where a Hamas activist who was riding the donkey cart was killed by an Israeli missile

Israeli authorities reopened the compound to Israeli and foreign tourists last week despite opposition from the Waqf, the Muslim authority in charge of the site. They were not given permission to pray there.

The intifada broke out after a provocative  visit to the mosque compound by the then Israeli opposition leader and now prime minister, Ariel Sharon.

Early in August, three right-wing Israeli MPs  tried to use their parliamentary privilege to enter the compound but police prevented them.

In May, Israeli Supreme Court rejected a petition, submitted every year by the extremist Temple Mount Faithful  group, seeking permission to symbolically place a foundation stone for a new Solomon Temple, which Jews say was demolished by the Babylonians in 586 BC, in Al-Aqsa compound.