OCCUPIED JERUSALEM, October 31 (IslamOnline & New Agencies) - A new, more hardline Israeli government is unlikely to make any major change in Israel's aggressive policy towards the Palestinians, leaving the prospects of returning to the negotiating table as remote as ever, analysts said Thursday, October 31.

With Labor out of the government and Sharon showing no signs of approaching President Moshe Katsav to dissolve parliament and call early elections, it looked increasingly likely he would seek a narrow coalition which would be dominated by the far-right, Agence France-Presse (AFP) reported.

Media reports said Sharon would hold talks Thursday with hardliner Avigdor Lieberman, who leads the extreme-right National Union coalition of seven MPs - enough for the prime minister to recover his majority in parliament.

In exchange for National Union's support, Sharon has reportedly offered Lieberman the foreign affairs portfolio, Israeli daily Maariv said, citing sources close to Lieberman.

With Israel teetering on the brink of a violent lurch rightwards, the prospects for a peaceful settlement with the Palestinians looked increasingly bleak.

"It appears that the Israeli political class is distancing itself more and more from the quest for peace," Palestinian chief negotiator Saeb Erakat said, according to AFP.

And Palestinian President Yasser Arafat predicted the situation would deteriorate rapidly with the appointment of Mofaz as Defense Minister and Moshe Yaalon as Chief of Staff.

"Imagine the Middle East with Sharon, Mofaz and Yaalon!" he added.

"The anticipated appointment of Mofaz is a step ... which is liable to have an impact on the entire region," the Israeli daily Yedioth Aharonot quoted the Palestinian President as saying.

"What are we, the Palestinians, left to expect of a government that is headed by Sharon, with Mofaz to his right and Yaalon to his left?" he said in an interview to be broadcast later Thursday on Israel private television.

"In Mofaz's appointment we are not talking about the defense minister of Micronesia or some other country, but the appointment of the Intifada chief of staff as the defense minister of Israel," he said.

Meanwhile in the occupied Palestinian territories, an Israeli army officer killed a Palestinian activist Thursday close to the (illegal) Jewish settlement of Beit El in the West Bank, the Israeli army said, according to AFP.

A Palestinian ambulance was hit in the middle of the shootout, leaving one person wounded, the army added.

The latest killing brought the Palestinian death toll since the start of the Intifada against Israeli occupation to 1,949, according to AFP.

In the West Bank city of Tulkarem Thursday, an elite squad of a dozen Israeli soldiers traded fire in a 30-minute gunbattle with the Al-Aqsa Martyrs Brigades.

The occupation soldiers penetrated a few meters (yards) inside Tulkarem refugee camp when the Brigades, an offshoot of President Arafat's resistance Fatah movement, opened fire on them from the camp's alleyways, a source from the Brigades said.

The Brigades thought at least one Israeli was shot because they could hear a soldier crying, the source said.

The occupation soldiers escaped after about 30 minutes, the source added, AFP added.

But before they did, they shot dead an 18-year-old Palestinian youth who was hit in the chest.

Israeli military sources denied any soldiers were hit in the battle, but said at least two Palestinians were wounded.