Sending balloons rather than bullets into the sky, thousands of Palestinians demonstrated on the second anniversary of their uprising against Israel, even as two more died in clashes with Israeli troops.

Palestinian leader Yasser Arafat, under Israeli siege in his headquarters for the 10th day, promised to continue the struggle for a Palestinian state with its capital in Jerusalem. He made his remarks by telephone to tens of thousands of marchers in Gaza City.

"Noble Jerusalem will remain the capital of the Palestinian state," Arafat said over a loudspeaker, repeating his long-standing position. "We are not only defending our holy places, Christian and Islamic, but every inch of our holy land."

An ambitious peace effort under a more moderate Israeli government broke down in January 2001, in part over the extent of a Palestinian role in Jerusalem, which the current Israeli government says is its indivisible capital.

Organizers said they had asked militants not to bring guns to the rally in Gaza City, where some earlier protests had been peppered with shots fired into the air. They said 50,000 people turned out. The crowd waved Palestinian flags and chanted support for Arafat, whose standing had appeared to flag before the latest Israeli siege.

Protesters in several West Bank communities, including Ramallah and a refugee camp near Bethlehem, sent hundreds of balloons into the sky. Children clutching candles gathered by night at Arafat's Jericho office and heard the leader tell them by phone, "You are our future. We are together until victory."

It seemed unlikely that the shift away from violent protests would mean a halt to the militant groups' attacks on Israelis, which Arafat himself has condemned. The attacks sparked Israel's seizure of most of the West Bank's Palestinian cities.

Speaking to reporters at the rally from his car while surrounded by bodyguards, the founder of the radical Islamic group Hamas, Sheikh Ahmed Yassin, urged the intifada to continue. "Resistance is the only way to achieve our goals and recover our rights," he said.

Palestinian sources said Israeli troops shot and killed two men on Friday. Israel's military said soldiers had fired in self-defense in both cases.

The uprising has claimed more than 1,800 lives on the Palestinian side and 620 on the Israeli side since it broke out two years ago. Within months, peace talks broke down and the hawkish Ariel Sharon was elected Israel's prime minister, removing from the table predecessor Ehud Barak's offer of a Palestinian state in almost all of the West Bank and Gaza with a foothold in Jerusalem.

Israel's military reoccupied most West Bank towns in June, following a pair of suicide bombings that killed 26 in Jerusalem. On most days, troops have prevented residents from leaving their houses even to go to schools, jobs, pharmacies or bakeries. The Palestinian economy, already impoverished, has been devastated.

Israeli officials said Saturday that Sharon had sent a senior aide, Dov Weisglass, to Washington to discuss the siege on Arafat's compound with U.S. officials. But White House press secretary Ari Fleischer said he had no information about upcoming White House meetings with Weisglass.

Israeli troops attacked Arafat's Ramallah headquarters in response to a Tel Aviv suicide bombing that killed six people on Sept. 19. They smashed most of its buildings, trapping the Palestinian leader with about 200 aides inside.

On Tuesday, the U.N. Security Council demanded that Israel end the operation in Ramallah and pull troops out of Palestinian territories it had occupied.

The White House said last week that President Bush also sent a message urging Israel to halt the operation, though Sharon has insisted that the Palestinians must first turn over alleged terrorists among those with Arafat in the compound.

Thousands of people also attended a rally Saturday at Kfar Manda in northern Israel to mark the intifada anniversary and honor 13 Israeli Arabs who died in clashes with security forces in October 2000.

West Bank intelligence chief Tarik Tirawi, who is wanted by Israel, spoke to the crowd by telephone from Arafat's headquarters and said those inside would not surrender or allow outsiders to impose leaders on the Palestinians.

With chants of "Death to Israel!" and "Death to America," tens of thousands of supporters of the intefadeh also marched through the streets of Beirut. Smaller crowds appeared in Cairo and other Arab capitals.

Relatives and doctors said an unarmed 25-year-old Palestinian man was killed by Israeli machine-gun fire early Saturday when he stepped out of his house in the Rafah refugee camp in the Gaza Strip. The Israeli military said he had been shooting at troops who returned fire.

Doctors at Shifa Hospital said that Mohammed Abu Ahoueh, 19, was shot in the head and killed while throwing stones in clashes near the Netzarim settlement of Israelis in the Gaza Strip. The military said demonstrators had neared an army post and "the soldiers were forced to fire to protect themselves."

The uprising broke out on Sept. 28, 2000, after Sharon, then Israel's opposition leader, visited the most disputed site in Jerusalem, what Jews refer to as the Temple Mount and Palestinians as the Haram as-Sharif mosque complex.

Rioting spread through the West Bank and Gaza Strip and it soon became known as the second "intifada," after a 1987-1993 uprising that helped lead to interim peace accords between Israel and the Palestinians.