Palestinian parties launched their election campaign with banners, rallies and parades Tuesday, amid growing tensions between the Islamic militant group Hamas and Palestinian leader Mahmoud Abbas over his suggestion to postpone the Jan. 25 parliamentary vote.

Abbas said for the first time Monday that the balloting could be put off if Israel bars Palestinians from voting in the sector of Jerusalem claimed by the Palestinians as a future capital.

Hamas, which is expected to make a strong showing in its first general election, insisted Tuesday that the vote take place on schedule. It is unlikely Abbas would postpone the election without Hamas' consent.

In Jerusalem, the head of Israel's Shin Bet security service told a parliamentary committee that a strong Hamas showing would spell "deep trouble" for Israel.

The start of the campaign was overshadowed by anarchy in Gaza and renewed Israeli-Palestinian fighting.

Late Monday, an Israeli airstrike killed two members of the militant Islamic Jihad group who Israel said were involved in rocket attacks. The two were in a car when it was struck by a missile. A third occupant of the car was wounded, along with two bystanders, hospital officials said. Islamic Jihad threatened revenge.

Across the West Bank and Gaza, parties decorated streets with banners and posters, launching the election campaign. Hamas signs read "Islam is the solution" and "One hand resists and one builds."

In the West Bank city of Nablus, Hamas candidates and about 200 supporters marched to a cemetery to pay their respects at the graves of three Hamas leaders killed in fighting with Israel. "We ask all Palestinians to join us to create an Islamic state. The Islamic state is on the rise," said Sheik Hamed Bitawi, a Hamas candidate.

In Gaza City, a children's parade for legislator Marwan Kanafani, an independent candidate, was led by actors dressed as cartoon characters, including Mickey Mouse.

The top Hamas candidate, Ismail Haniyeh, told reporters in Gaza that the election must not be postponed under any circumstances, despite growing pressure by Abbas' Fatah Party to put off the vote.

"We have told them (Fatah) that postponing the election will lead to a vacuum and to a dark future," Haniyeh said. "Postponing the election is not the solution. We urged them (Fatah) to go ahead with the election."

The No. 2 on the Hamas slate, Mohammed Abu Teir, said the election should be held even if Jerusalem's Palestinians cannot cast their ballots in the city and have to travel to West Bank suburbs to do so.

Abu Teir's comment marked the first time a Hamas official raised such an option. Election procedures in Jerusalem are of great symbolic importance to Israel and the Palestinians, with both claiming it as their capital.

Abu Teir also said he expects Hamas to win up to 40 percent of the 132 parliament seats — the first such prediction by a senior Hamas official.

On Monday, Abbas complained that Israel is balking at allowing Jerusalem's Palestinians to vote. "We all agree that Jerusalem should be included in the elections," Abbas said in Doha, Qatar. "If it is not included, all the factions agree there should be no elections."

There are other reasons. Fatah, reeling from internal squabbles, fears an election fiasco. Also, armed gangs, mostly from Fatah itself, are causing mayhem in Gaza, calling into question whether orderly elections can be held.

The head of the Fatah campaign, Information Minister Nabil Shaath, said he expected Abbas' party to win 70 percent of the seats, a prediction that far exceeded recent poll results that gave Fatah 43 percent of the seat.

An Israeli ban on Jerusalem voting would make a convenient excuse for delaying the vote, but Israeli officials say they don't want to take the blame and are looking for a compromise. One official called the Jerusalem issue a technical issue that could be resolved.

U.S. envoys were to discuss the issue with Israeli officials later this week.

In the 1996 parliamentary election and again a year ago, when Abbas was elected to succeed the late Yasser Arafat, east Jerusalem's Palestinians were permitted to vote by absentee ballot in post offices. Israel says interim peace accords ban Palestinian political activity in Jerusalem.

The new factor is Hamas participation. Israel objects, noting Hamas responsibility for dozens of suicide bombings and its charter calling for Israel's destruction.

Israel's Shin Bet chief, Yuval Diskin, told a closed-door meeting of parliament's Defense and Foreign Affairs Committee that a strong Hamas showing would create trouble for Israel, particularly if the group joins the Palestinian Authority, said parliament spokesman Giora Pordes.

On Tuesday, police detained Mustafa Barghouti, an independent candidate, at a rally at the Damascus gate of Jerusalem's walled Old City.

On Monday, authorities broke up a political gathering of Fatah supporters in Jerusalem but made no arrests, police spokesman Shmuel Ben-Ruby said. A participant in the meeting, Ahmed Ghneim, called the raid "the beginning of the battle for the elections in Jerusalem."

In other developments Tuesday:

— In the West Bank city of Hebron, Jewish settlers threw eggs and a chemical substance at Israeli soldiers who distributed eviction notices to eight Israeli squatter families. The squatters had taken over a Palestinian market area and were given two weeks to leave the area. One police officer was slightly wounded and seven settlers were detained.

— The Israeli military said the large Jewish settlement of Modiin Illit on the West Bank-Israel frontier is illegally building homes on what appears to be private Palestinian land. The settlement was ordered last week to halt construction, but has failed to do so, military officials said.

— Israel's Shin Bet security agency proposed building a wall through an Arab community along the Lebanese border to prevent attacks by Lebanese militants. The wall along the U.N.-recognized border would cut the Israeli-controlled town of Ghajar in half, requiring most of the 2,000 residents to move to the southern side, residents said.