A Palestinian teenager blew herself up at a busy Jerusalem bus station Wednesday, killing two Israeli policemen who stopped her for a security check and wounding 16 bystanders in an attack that evaded Israel's clampdown on the West Bank (search) for the Jewish holidays.

Early Thursday, two armed Palestinians infiltrated an Israeli army outpost in a Gaza Strip (search) settlement, killing at least three Israelis in a fierce gun battle before being shot dead, Israeli media reported. Two other Israelis were wounded, one critically, the Web site of the Israeli newspaper Yediot Ahronot reported. The army refused to confirm the report of dead.

Also Wednesday, an Israeli helicopter fired a missile in a Gaza refugee camp, wounding 12 people, Palestinians said. And Prime Minister Ariel Sharon (search) dropped a plan to evacuate 21 Jewish settlements in the Gaza Strip simultaneously at the beginning of next year, reverting to an earlier formula — a staged pullout in the summer of 2005.

That prompted Secretary of State Colin Powell to say Palestinian Prime Minister Ahmed Qureia — and not Palestinian leader Yasser Arafat — should be empowered to take control of Gaza. Arafat "is not able to act in this manner," Powell said Wednesday. Israel and the United States are boycotting Arafat, the head of the Palestinian Authority.

Sharon also hinted that Israel might one day assassinate Arafat, as it did with two leaders of the Islamic militant group Hamas responsible for scores of suicide bombings.

The Al Aqsa Martyrs' Brigades, a violent group with ties to Arafat's Fatah movement, claimed responsibility for Wednesday's bombing, but it was unclear what would trigger an Israeli move to assassinate Arafat. Israel has not carried out earlier threats despite attacks with dozens of casualties.

The blast at a busy intersection in the French Hill neighborhood of northern Jerusalem destroyed a nearby police post, leaving shards of glass in the road as the smell of burning rubber wafted in the air.

The Al Aqsa brigades identified the bomber as Zainab Abu Salem, 19, from the Askar refugee camp near the West Bank city of Nablus.

A group member in Nablus told The Associated Press on condition of anonymity that Zainab volunteered for a suicide attack, saying she wanted to avenge Palestinian militants killed recently in Nablus.

"She said that if we refused, she would attack an army post with a knife," the Al Aqsa member said. "So we organized quickly. We set up the attack within 17 hours and we chose this site in Jerusalem because we know it."

Her father, Ali Abu Salem, 48, collapsed and his wife, Sahar, wailed at the news of their daughter's attack.

"Why? Why is this happening to us?," Sahar asked.

Police said two border guards at the bus stop spotted the young woman carrying a bag and asked her to open it. She refused, then detonated as much as 11 pounds of explosives inside.

"I just heard this loud explosion and people started yelling, 'Terrorist! Terrorist!"' said Freda Amsalem, 40, from the nearby West Bank settlement of Maaleh Adumim. "Why do they do this to us? Why do they do this to innocent people? They're destroying families. Enough!"

Amsalem was not injured.

The bombing came two days before the holiest day on the Jewish calendar — the fast of Yom Kippur — and at a time of heightened police presence nationwide. Israel has clamped down on the West Bank, banning Palestinians from entering. Still, Palestinians determined to reach Israel for work usually sneak past roadblocks.

It was the first suicide bombing in Jerusalem since Feb. 22, when eight passengers were killed in a bus attack. Three weeks ago, two Hamas bombers blew themselves up in southern Beersheba, killing 16 Israelis. The bombings ended months of relative calm.

In the Thursday infiltration, the army said soldiers were searching for a third militant who may have fled the area, but were not certain that there were ever more than three Palestinians involved in the attack.

A caller to The Associated Press in Gaza City said the operation was a joint effort of the Islamic Jihad; the Popular Resistance Committee, an umbrella group of Palestinian factions; and the Ahmed Abu El-Rish Brigades, a group linked to Yasser Arafat's Fatah faction.

The caller said the groups had sent three militants into the Morag settlement and the "operation is still under way." He said a statement would be released.

Israel's Army Radio reported that heavy fog in the area of Morag, home to 36 families, in the southern Gaza Strip made it possible for the militants to reach and enter the outpost. Israeli media described the incident as "difficult."

"Unfortunately, we have suffered a heavy loss," said Nissim Bracha, Morag's secretary.

It took 45 minutes from the moment the first Palestinian shot was fired at 6:45 a.m. for the soldiers to kill the militants and evacuate their own casualties, Bracha said.

Late Wednesday, Israeli tanks and troops entered the Khan Younis refugee camp in southern Gaza, witnesses said. A bulldozer tore down three houses across from a bloc of Jewish settlements. The military said the purpose was to clear areas used by militants to fire at Israelis.

An Israeli helicopter later fired a missile that wounded the 12. There were no reports on the seriousness of the injuries.

Earlier, Sharon hinted Israel might kill Arafat, as it did with Hamas founder Sheik Ahmed Yassin and his successor, Abdel Aziz Rantisi.

"We acted against Hamas people, and since then more people have been added to this list. When the time is right, we will act the same way with Arafat," he told Israel Radio before the bombing.

Sharon charges that Arafat has encouraged Palestinian violence against Israel during their ongoing four-year conflict. Arafat blames Israel.

Sharon adviser Dore Gold said that Israeli measures such as the West Bank separation barrier have "prevented a much worse disaster from occurring."

Palestinians say the barrier, roadblocks and Israeli military operations have provoked violence and led embittered Palestinians to become bombers.

Palestinian militants have staged dozens of suicide bombings inside Israel during the past four years, killing more than 400 people. Women have carried out at least eight of those attacks.

Sharon was asked about the Gaza pullout plan in an interview broadcast Wednesday evening on Channel 10 TV.

He said evacuation of the 21 settlements in Gaza and four in the West Bank would start next summer and take about 12 weeks to complete. In August, Sharon said he favored an accelerated schedule, emptying all the settlements simultaneously early next year.