Hamas (search) on Wednesday canceled its 17th anniversary rally over concerns that Israel could target leaders of the Islamic militant group in retaliation for a deadly attack on an army outpost in Gaza.

Hamas rallies are elaborate shows of force, with marching gunmen, displays of weapons and re-enactments of attacks on Israelis.

The decision to cancel Friday's rally comes at a time when Hamas is competing for power with rival factions, including the ruling Fatah movement. Displays of popular support are crucial both during the run-up to the Jan. 9 election for Palestinian Authority (search) president and the planned Israeli withdrawal from the Gaza Strip in 2005.

The cancelation came a day after the interim Palestinian leader, Mahmoud Abbas (search), said the armed uprising was a mistake and must end. Abbas, a pragmatist who opposes violence, is trying to negotiate a cease-fire with Hamas, which has killed hundreds of Israelis in bombings and shootings in the past decade.

The Hamas rally was to be held at a large sports stadium in Gaza City (search). The group had already put up a stage, bought chairs and decorated the streets of Gaza City with posters of former leaders Ahmed Yassin (search) and Abdel Aziz Rantisi (search), both assassinated by Israel in air strikes earlier this year.

Hamas sources said there was renewed concern about the safety of Hamas leaders after a Hamas activist in Damascus, Syria, narrowly escaped a car bomb attack Monday. Hamas and Syria blamed Israel, which declined comment.

In Gaza City, Hamas spokesman Mushir al-Masri said Friday's rally was canceled "in view of Zionist threats to target the Palestinian masses" following a weekend bomb attack that killed five Israeli soldiers at a Gaza outpost.

In the attack, Hamas and members of a Fatah offshoot detonated 1.5 tons of explosives packed in a tunnel dug under the outpost. After the outpost bombing, Israeli Prime Minister Ariel Sharon (search) reportedly asked the military to step up targeted killings of militants involved in attacks on soldiers and settlers in Gaza.

Hamas leaders have increasingly gone underground since the assassination of Yassin in April, switching homes, cars and phones and avoiding public appearances.

Yassin, a quadriplegic, founded Hamas in December 1987, several days after the outbreak of the first uprising against Israeli occupation. The group seeks Israel's destruction and opposes a peace deal with the Jewish state. Hamas has carried out scores of bombings and shootings since 1987.

Abbas wants Hamas and other militants to halt attacks ahead of the Palestinian election but has not won an explicit promise. Hamas members have hinted that the group would hold off on attacks in Israel but not in the West Bank and Gaza.

An anniversary statement posted on the group's Web site said that "resistance remains the sole strategic option of the Hamas movement to eject Zionist usurpers from all Palestinian lands."

Hamas criticized the new Palestinian leadership for splitting up presidential, legislative and municipal elections. Hamas is boycotting the presidential elections but will participate in the municipal vote and is considering fielding candidates for parliament. Hamas expects to do well, though recent polls indicate it has been losing in popularity since Arafat's death, with Fatah gaining ground.

Elsewhere, a Palestinian was killed as he walked near an Israeli army post in central Gaza, Palestinian security officials said. The military said soldiers fired warning shots after several cars drove at high speed along a closed road.

Also Wednesday, Israeli troops destroyed the house of a Hamas militant in the West Bank city of Hebron. The house belonged to Iyad Abu Shakhidas, a militant the army said supplied the explosives to suicide bombers who carried out a double bombing in the city of Beersheba in August, killing 16 people.

During the last four years of fighting the army has routinely destroyed the homes of militants, saying it acts as a deterrent. On Tuesday the army destroyed the homes of two other militants in Hebron.