Israeli forces destroyed six houses in a Palestinian refugee camp in the Gaza Strip early Friday, and nine Palestinians were wounded in a firefight triggered by the Israeli incursion.

In the West Bank town of Ramallah, a mysterious blast rocked a building that is home to Qais Abdel Karim, a leader of the Democratic Front for the Liberation of Palestine, a radical PLO faction. He was not at home at the time. His neighbors dismissed initial claims that he was a target of an Israeli attack.

Despite the continued violence, Israel and the Palestinians are trying to set up truce talks, an aide to Israeli Foreign Minister Shimon Peres said.

The Israeli incursion into Rafah camp in the southern Gaza Strip began after midnight when four Israeli tanks and two bulldozers started knocking down buildings there, Palestinians said. Palestinian gunmen rushed to the scene and opened fire on the Israelis as they leveled buildings facing an Israeli outpost. The Israelis fired at the Palestinians, wounding nine, three seriously, doctors said.

By Palestinian count, the house demolitions brought to 129 the number of buildings razed in the camp since the outbreak of Israeli-Palestinian fighting 11 months ago. The camp, near the border with Egypt, is a frequent scene of clashes between Palestinian gunmen and Israeli soldiers.

The army said the buildings demolished early Friday were uninhabited, and were used as cover for Palestinians firing rifles and throwing grenades at the Israeli border outpost. Also, Israel said that the buildings were used for arms smuggling from Egypt by way of tunnels under the border.

Standing amid the rubble of her home, Amina al-Shaar, 36, said she and her eight children were expelled without warning. "Yesterday we bought new school books for them and now, no school, no books and no place to sleep," she said.

The Ramallah blast went off around midnight. Palestinian officials initially said Abdel Karim, widely known as Abu Layla, was the target of an Israeli attack, either by missiles or tank shells. The army said its forces did not fire missiles or tank shells in Ramallah.

Abdel Karim's neighbors said a bomb went off in a garage under the house. The only person injured was an activist in the Islamic militant Hamas group which has carried out bombings in Israel.

Earlier this week, Israel killed the leader of another PLO faction, Mustafa Zibri, in a targeted missile attack. Zibri, head of the Popular Front for the Liberation of Palestine, was killed while sitting at his desk in his Ramallah office. Israel said he had a history of involvement in terrorism. The Palestinians said he was a political leader.

In the West Bank city of Hebron, doctors carried the body of Dr. Moussa Safi Kidmat through the streets in a funeral procession. He was killed yesterday as he ran to retrieve his car during a clash between Israeli forces and Palestinian gunmen.

Despite the continuing incidents, contacts are under way to set up truce talks between Peres and Palestinian leader Yasser Arafat, a Peres aide said. Peres has said the talks could take place next week.

Yoram Dori, a spokesman for Peres, said officials from both sides are in touch to arrange the meeting. He said the goal is to stop the violence and implement the report of an international commission, a process that would lead to peace negotiations. "Careful preparation is necessary in the present atmosphere of hostility and mistrust," Dori said.

In Jerusalem, meanwhile, police captured a Palestinian carrying a bag with two rifles. They said he was planning a gunfire attack in northern Jerusalem. Another Palestinian ran into a community center and was later arrested, police said.

On Friday morning, police stopped a car and detained the driver and another Palestinian hiding in the trunk. Police said the two were accomplices of the Palestinian who was carrying the weapons.

Jerusalem police commander Mickey Levy said experts would compare the two rifles with bullet casings found at the scene of shooting attacks in the area. In the most recent attack, Palestinians opened fire Saturday on a car, killing three Israelis and injuring two infants.