Two observers from an international force in Hebron were shot and killed when Palestinians opened fire on their car in the West Bank on Tuesday, the Israeli military said.

The observers, serving in the Temporary International Presence in Hebron, were driving on a bypass road used mostly by Jewish settlers when their car came under fire near Halhoul, a West Bank town north of Hebron.

A Norwegian official in the West Bank said the victims were Turkish and Swiss. There was no immediate comment from the peace force. The two were the first members of the force to be killed in the West Bank.

A third observer was slightly wounded, the military said.

Earlier Tuesday, a car carrying explosives blew up during a security check near Jerusalem's largest mall in what police said was a thwarted attack by Palestinian militants. Two men in the car were killed.

The international force, made up of unarmed observers from Scandinavian and European countries, was set up under a 1997 agreement dividing Hebron into Palestinian- and Israeli-controlled zones.

The city was divided because about 450 Israeli settlers live in three enclaves in the center of the city, among some 130,000 Palestinians. The observers, recognizable by their clearly marked white cars, make periodic reports about violations of the truce.

Settlers charge that the observers are biased against them, while Palestinians say that the settlers, among the most militant in the West Bank, constantly harass the local Palestinians.

U.S. envoy Anthony Zinni, meanwhile, made some headway in cease-fire talks. Israeli Defense Minister Binyamin Ben-Eliezer said Tuesday that Israel reluctantly accepted the envoy's latest proposals.

``There are parts where we have to grit our teeth,'' Ben-Eliezer told Israel Army Radio.

Palestinians met with Zinni on Tuesday to receive further clarifications, but it was not clear whether a truce deal would be reached before the start of Wednesday's Arab summit in Beirut.

Israel has linked Palestinian leader Yasser Arafat's departure to Beirut to a cease-fire agreement, while the United States has asked Prime Minister Ariel Sharon to let Arafat go in any event.

At the summit, Saudi Arabia is to present a proposal to end the Israeli-Arab conflict in exchange for a withdrawal from all the lands Israel occupied in the 1967 Mideast war. Arafat's presence in Beirut would lend the proceedings greater weight.

Israel Radio reported that Qatari Foreign Minister Sheik Hamad bin Jassem bin Jabor Al Thani proposed to meet Sharon in Jerusalem, in exchange for Israel agreeing to let the visitor take Arafat in his personal helicopter to the summit. Sharon rejected the proposal, the radio said.

In Jerusalem, a car carrying explosives blew up Tuesday near the city's Malha Mall after being stopped by police in a security check. The two men in the car were killed, said police spokesman Kobi Zariyahu. Police sources said the mall apparently was the target of the planned attack.

The car had come from an area near the West Bank town of Bethlehem, just south of Jerusalem, police said. There was no immediate claim of responsibility.

Acting on intelligence warnings of an attack, dozens of police have been surrounding the mall in recent days. The mall had not been attacked before in the past 18 months of fighting. The mall was crowded this week with shoppers preparing for the Jewish holiday of Passover, which begins at sundown Wednesday.

Palestinian militants have been trying to disrupt U.S.-led truce talks with attacks on Israeli civilians, including two suicide bombings last week.

Earlier this week, Zinni submitted proposals to settle disputes over the timetable for implementing a truce brokered last year by CIA chief George Tenet.

Israel proposed four weeks for implementation, while the Palestinians said it should be done in two weeks. Zinni urged the Israelis to accept a shorter timeframe.

Palestinian officials were to raised some reservations in their meeting with Zinni on Tuesday. Palestinian Information Minister Yasser Abed Rabbo said the Palestinians would request linking the cease-fire to a plan for peace talks and reopening Palestinian institutions in Jerusalem.

Palestinian officials said they expected Arafat to attend the Arab summit and West Bank security chief Jibril Rajoub said Arafat's participation is ``100 percent assured,'' a veiled hint at strong U.S. pressure on Israel.

In Washington, White House spokesman Ari Fleischer said President Bush ``believes that Prime Minister Sharon and the Israel government should give serious consideration to allowing Yasser Arafat to attend.''

At the United Nations, Fred Eckhard, spokesman for Kofi Annan, said the secretary general was calling on Israel to allow Arafat to attend because the meeting is ``expected to endorse an important peace proposal.''

Sharon aide Raanan Gissin said no decision had been made about allowing Arafat to go to Beirut. ``The decision will be made very close to the time of the summit,'' Gissin said late Monday.

Even if Arafat is allowed to go to the summit, Sharon has threatened not to allow him to return if there are terror attacks.

Responding, Arafat told ABC News that there is no law that would prevent him from returning to his homeland. ``This is my right.'' Arafat also said Palestinians were the victims of terrorism.

``We are the only people now who are under occupation. Can you understand ... the meaning of that? The real terrorism is this occupation.''

The Palestinian Cabinet released a statement saying that Israeli ``blackmail'' would not keep Arafat from the summit.

Sharon presented his own peace outline at a party meeting in Tel Aviv Monday. He said he favors a three-stage process, starting with a cease-fire, then an open-ended partial agreement and finally talks on a peace accord. He did not give details, but he has outlined a similar formula several times during his year in office.