GAZA, 16 January — Palestinians arrested the leader of the Popular Front for the Liberation of Palestine (PFLP) yesterday as two settlers were killed by gunmen in the occupied territories. PFLP leader Ahmed Saadat, wanted by Israel for the assassination of an Israeli Cabinet minister, was arrested in the West Bank city of Ramallah.

A spokesman for Israeli Prime Minister Ariel Sharon said Israel had not been informed of an arrest. "Until I see him behind bars, I won’t believe it," Sharon’s spokesman, Raanan Gissin, told Reuters. "We’ve been disappointed so many times and fed up with so many announcements that they’ve arrested someone."

Israel has said it will not allow Palestinian President Yasser Arafat to leave Ramallah, encircled by Israeli forces, until he arrests Saadat and other PFLP activists it believes are behind the assassination in October of Tourism Minister Rehavam Zeevi.

Earlier in the day, the settlers were shot dead in apparent revenge for the assassination of a Palestinian a day earlier. Israeli officials said a 72-year-old settler who also held a US passport was killed outside Bethlehem in the West Bank and a woman was shot dead hours later near the Jewish settlement of Givat Zeev, five km (three miles) north of Jerusalem.

"Our heroic troops in Beit Sahour fired on a filthy Israeli agent which led to his immediate death," the Al-Aqsa Martyrs Brigades said in a statement faxed to Reuters, referring to a village near Palestinian-ruled Bethlehem.

An Israeli government spokesman denied the Israeli was an agent. Police identified the dead man as Avi Boaz, who was born in Israel.

Hours after Boaz’s death, two Palestinian gunmen approached a car near a petrol station at the entrance to Givat Zeev and opened fire from close range, killing one woman from the settlement.