Israel (search) killed two top Palestinian fugitives Tuesday in a missile attack on their cars, triggering threats of revenge by terrorists that could further erode the fragile truce between the two sides.

Even as tensions rose, however, Israeli and Palestinian negotiators were trying to resolve remaining disputes over new security arrangements on the Gaza-Egypt border.

Earlier in the day, Israeli Cabinet ministers approved the deployment of European inspectors at the border, a breakthrough after weeks of slow-moving talks and a major step toward giving the Palestinians freedom of movement without Israeli controls for the first time in four decades.

But Palestinian negotiators complained that Israel is stalling on other key issues linked to its pullout from the Gaza Strip (search) in September, including creating a passage between the West Bank and Gaza and speeding up the movement of cargo and workers from Gaza to Israel.

In Tuesday's airstrike, missiles slammed into a car carrying the fugitives — Hassan Madhoun of the Al Aqsa Martyrs' Brigades (search) and Fawzi Abu Kara of Hamas (search). The car was driving on a main road next to the Jebaliya refugee camp when it was hit.

Just minutes earlier, Palestinian leader Mahmoud Abbas had traveled on the same road on his way to Gaza City, Abbas' bodyguards said.

Madhoun had been involved in rocket attacks on Israel, serving as a coordinator with other militant groups, including Hamas and Islamic Jihad, Israeli officials said. He also helped plan three bombing attacks in the past two years that killed 20 Israelis, including a blast in Israel's Ashdod port, the army said.

Hamas officials said Abu Kara was an expert in making homemade rockets.

Military officials said Madhoun was the main target of the attack. Nine bystanders were wounded.

Hamas and Al Aqsa, a violent offshoot of Abbas' ruling Fatah movement, threatened revenge. "This is an open war," said Hamas spokesman Mushir al-Masri. "(The Israelis) are going to pay a heavy price for their crimes."

Hamas and Al Aqsa did not say an informal 9-month-old truce was off, but they have insisted on the right to respond to Israeli strikes, a position Abbas has dismissed as unacceptable. Since the truce deal, Hamas and Al Aqsa have refrained from carrying out attacks on Israel, while Islamic Jihad has been responsible for four suicide attacks.

International mediators, meanwhile, tried to wrap up a deal on reopening the Rafah terminal on the Gaza-Egypt border, the Gazans' gate to the world. Israel closed Rafah before withdrawing, and Abbas agreed he would only reopen the border with Israeli agreement.

Israel's Security Cabinet agreed Tuesday to deploy European inspectors to replace Israeli border personnel, who had controlled Palestinian movement in and out of Gaza since capturing the territory in the 1967 Mideast war. However, Israel and the Palestinians disagree over how much authority the inspectors should have — the Palestinians consider them to be advisers, while Israel wants them to be in charge.

Israel also wants to be able to monitor Rafah traffic via closed-circuit TV, a demand the Palestinians reject.

"The third party is there for a reason, to monitor that we carry out our obligations," said Palestinian negotiator Saeb Erekat. "There should be no camera linkage to Israel."

Israel, meanwhile, would operate an alternate crossing, Kerem Shalom, several miles away at the junction point between Egypt, Gaza and Israel. The crossing would handle goods and foreign tourists entering Gaza.

Palestinians say outgoing goods should move through Rafah, not Kerem Shalom — another point of dispute. Erekat said he hopes Rafah will reopen as early as mid-November.

A reopening of the border could give Abbas a badly needed boost as he heads into Jan. 25 parliamentary elections. Hamas is expected to pose a strong challenge, and until now, Gazans have seen few real benefits from the Israeli departure.

Since the pullout, Israel has closed two Gaza crossings — Karni for cargo and Erez for workers — for extended periods because of security alerts, leaving the coastal strip virtually cut off from the world.