OCCUPIED JERUSALEM/BETHLEHEM, 17 April — US Secretary of State Colin Powell was set to leave the region after failing to rein in Israel. Powell said yesterday that he had made progress but might not have a truce in hand when he wraps up his peace mission today.

The Palestinians dismissed Powell’s “progress” report, insisting that until Israeli Prime Minister Ariel Sharon ends his army’s offensive in the West Bank and pulls back troops, talk of a breakthrough was out of the question. The secretary of state was to meet Palestinian leader Yasser Arafat in his Ramallah compound today before leaving for Cairo to discuss his mission with Egyptian leaders.

A fire was last night burning out of control in one of the chapels at the Church of the Nativity, said people inside. The Israeli Army has been besieging some 240 Palestinian fighters who took sanctuary in the church two weeks ago, and Palestinians accused the Israeli Army of attempting to storm the church last night after heavy gunfire broke out. The night sky over Bethlehem was lit up by bright flashes and blasts echoed through the deserted streets. There were unconfirmed reports that the bell tower of the church had been damaged.

Hours before, the Patriarch of Jerusalem, the head of the Catholic Church, condemned the Israeli Army’s siege in an interview with The Independent.

Earlier yesterday, two fighters left the church, after the Israeli Army agreed to evacuate them for medical reasons. One was half dead with a bullet wound to the chest, the other has epilepsy.

Michael Sabbah, the Patriarch of Jerusalem, told The Independent the Israeli Army should withdraw and allow the Palestinian fighters inside the church to leave freely. “Military laws end at the walls of our basilica,” he said. “They are refugees,” the patriarch said. “They took refuge inside the church. For us, once they have taken refuge, they are human beings. They are no longer fighters.

Israeli soldiers raided a West Bank town while a Palestinian was killed and two others wounded by Israeli tank fire in the Gaza Strip. The tank had fired on the Palestinian village of Beit Lahya from the Jewish settlement of Dugit in the north of the Gaza Strip.

Palestinians reacted with rage, and Israelis with delight, to Monday’s arrest of Marwan Barghouti, a charismatic leader of Fatah.

The armed wing of the Islamic Hamas movement warned Israel of serious consequences if Barghouti is not freed. “We...tell Sharon, his government and army ‘you have opened the doors of hell on yourselves by detaining this national leader and transformed yourselves into legitimate targets for killing and assassination’,” the Ezzaddin Al-Qassam Brigades said. Sharon has vowed to put Barghouti on trial. Palestinian negotiator Saeb Erekat said a trial would violate interim Israel-Palestinian peace accords.

In the Askar refugee camp near Nablus, troops shot dead an 11-year-old boy, Qusay Abu Aisha, outside his home, his father said. He said the army was preventing ambulances from reaching the area. In the Gaza Strip, troops shot dead Younis Abu Gharara, 25, a mentally and physically ill Palestinian, near Beit Lahiya, family members and doctors said.

Arafat called for a summit of the Organization of the Islamic Conference on the Middle East crisis, during a phone conversation with the emir of Qatar, a top adviser said.