Palestinian leader Yasser Arafat reacted angrily Saturday to an Israeli raid in the West Bank (search) that killed three Palestinians, saying the violence threatens the peace process.

Two of those killed in Friday's raid on a bomb lab by Israeli troops were members of the Islamic militant group Hamas. An Israeli soldier also was killed.

The firefight marred a period of relative calm since Palestinian militants declared a unilateral cease-fire June 29.

"Israel is not only violating the truce — it is also destroying the whole peace process," Arafat said Saturday from his headquarters in the West Bank.

Troops were searching for Hamas fugitives when they came under fire in the Askar refugee camp near Nablus (search), the Israeli military said. One militant was killed in the ensuing gunbattle; another was buried under rubble after an explosion tore through the building the military said housed the bomb factory.

Hamas' military wing threatened revenge for the killing of two of its members, although the group's leaders stopped short of saying they would scrap their truce as a result.

A third Palestinian from the refugee camp also died Friday. He joined a group of youths throwing stones at the troops; doctors said he was shot, though an army spokesman said troops fired only rubber bullets and tear gas.

Despite the threat from Hamas (search), it appeared unlikely the militants' five-week-old truce would collapse over the Israeli raid. Hamas political leaders suggested privately they would not call off the cease-fire, and in public statements refrained from making threats against Israel.

Meanwhile, Palestinian security chief Mohammed Dahlan said it would cost $250 million and take three years to rebuild police stations destroyed during nearly three years of fighting. The Palestinians are seeking the money from international donors, Dahlan said in a statement late Friday.

Strengthening police forces is key to progress on the U.S.-backed "road map" peace plan, which calls on the Palestinians to dismantle militant groups that have launched hundreds of suicide bombings and other attacks against Israelis.

Under the peace plan, Israel is supposed to withdraw gradually from Palestinian areas occupied during the last three years of fighting, turning control over to Palestinian security forces. Israel has pulled out of the West Bank town of Bethlehem and parts of the Gaza Strip, but insists Palestinians must crack down on militants.

The Palestinian leadership is reluctant to confront militants such as the powerful groups Hamas and Islamic Jihad (search), arguing the Palestinian police forces are too weak and a showdown could spark civil war.

Instead, the Palestinians say they are trying to persuade militants to end their attacks on Israelis and turn in weapons.

Soon after fighting broke out in September of 2000, Israel sent warplanes and helicopter gunships to level police posts and security headquarters in the West Bank and Gaza Strip, saying the Palestinian police did nothing to stop attacks on Israelis and were involved in some of them.

Israel is boycotting Arafat, accusing him of supporting terrorism and undermining peace moves. Palestinian Prime Minister Mahmoud Abbas (search) was appointed in April after heavy U.S. and Israeli pressure for an alternative to Arafat.

A trip by Abbas to Kuwait has been called off because he refused to apologize for the Palestinians' backing of Saddam Hussein during Iraq's 1990 invasion of Kuwait, a senior Palestinian official said Saturday on condition of anonymity.

The official said Kuwaiti officials were angered because Abbas refused their request to apologize for the Palestinians' backing for Iraq during the invasion, which sparked the 1991 Gulf War.

Abbas' trip to Kuwait — where he was invited to address lawmakers — was to have been the highest-level visit by a Palestinian since relations soured during the Gulf War.

Abbas arrived in Saudi Arabia Thursday and is expected to travel to Jordan Sunday, now without the stop in Kuwait.

The "the Kuwaiti people absolutely reject" such a visit without an apology for the "shameful stance," Barrak al-Noon (search), the acting speaker of Kuwait's Parliament, said in a statement.

After the Gulf War, Kuwaitis lashed out at Palestinians for their support of Iraq by deporting thousands of Palestinian workers and beating others. Only about 5,000 Palestinians still live in Kuwait, which once was home to some 400,000 Palestinian workers.

The only other Palestinian official to travel to Kuwait since then was Faisal Husseini, then chief of the Palestine Liberation Organization (search) in Jerusalem, who visited in May 2001. He died during the trip of a heart attack.

During his visit, Husseini denied the PLO had supported the invasion of Kuwait, but did not apologize. He said, however, that "the PLO position toward the invasion wasn't the best.

Meanwhile, Israel's ambassador to the United Nations sent a letter to U.N. Secretary General Kofi Annan warning that renewed attacks on Israel's northern border by Hezbollah guerrillas could destabilize the region, Israeli media reported.

Hezbollah fighters and Israeli troops traded artillery fire over a disputed area along the Israeli-Lebanese border Friday.

If the attacks continue, Ambassador Dan Gillerman wrote, Israel would have "no option but to take the necessary measures to protect its citizens," the Web site of Israel's Haaretz newspaper reported.