Israel Seals Off Gaza Strip as Violence Erupts After Killing

A violent day of Arab-Israeli clashes gave ammunition to both Israeli Prime Minister Yitzhak Shamir and opposition leader Yitzhak Rabin in their battle for the premiership in elections June 23.

Three Palestinians and two Israelis were killed and 40 Palestinians and five Israelis were wounded in a series of disturbances Sunday in Israel and the occupied Gaza Strip.

The Israeli Army reacted by slapping a closure order on the Gaza Strip, barring its 750,000 Palestinians from entering Israel for three days.

Mr. Shamir and Mr. Rabin, stressing the security fears of Israeli voters, focused on the fatal stabbing of a 15-year-old Israeli girl by a Gaza man in the town of Bat Yam, near Tel Aviv.

"He [Rabin] said it is inconceivable that Palestinian knifers are allowed to move freely in the streets of our cities and it is unacceptable that Israeli citizens feel insecure in their neighborhoods," Rabin spokesman Gad Ben Ari said.

Shamir, quoted by Israel Television, said he regretted that the girl's attacker was captured alive.

Israelis shouting "Revenge" and "Death to Arabs" took to the streets after the Bat Yam attack. They wounded five Arab workers and a policeman and damaged several Arab-owned vehicles. Police said 28 Israeli rioters were detained.

In the Gaza Strip, Israeli troops shot and wounded 34 Palestinians in clashes sparked by an early morning gun battle in which three Palestinians and a border policeman were killed. A Palestinian and four soldiers were wounded.

Army officers said the gun fight erupted as combined units of soldiers and border police were searching for wanted men.

Palestinians launched a three-day general strike to protest Sunday's violence, and in mourning for the fundamentalists killed in the clash in Gaza City. All three were reported to belong to the fundamentalist Hamas movement.

The closure order on Gaza was imposed partly to stem an eruption of vigilante assaults on Arab passersby by Jewish extremists that followed Sunday's stabbing. Defense Minister Moshe Arens said expulsion orders against Palestinian activists were now under appeal in Israel's High Court. Israel bombs southern Lebanon

Israeli warplanes and helicopters blasted pro-Iranian Hizbullah guerrillas in south Lebanon yesterday, killing five people after the Lebanese government refused to disarm the militant Shiite Muslim group.

In the first of three air strikes, two Israeli planes fired rockets into the village of Jibsheet, a Hizbullah (Party of God) stronghold 40 miles south of Beirut, security sources said.

One rocket destroyed the home of Yasser Nassour, a local Hizbullah commander, killing him, his wife, two daughters, and his father-in-law. Two other civilians were wounded, the security sources added.

Israel started targeting homes of Hizbullah officers last Thursday because the guerrillas have few offices but usually operate covertly out of their homes in the south.

Some 30 minutes after the first raid, helicopter gunships fired eight rockets into the village of Derdghaiya, nine miles east of the port of Tyre and inside a zone held by United Nations peacekeepers. There were no reports of casualties, security sources said.

An Israeli Army spokeswoman said Israeli planes attacked Hizbullah targets in Jibsheet, Derdghaiya, and Majdel Silm, where a guerrilla post was hit, before returning safely to base.

Israel has launched seven air raids into Lebanon in the last five days after a Hizbullah assault last Tuesday on an outpost of the Israeli-backed South Lebanon Army (SLA) militia.

Four SLA militiamen were captured and a fifth was killed. Israel retaliated with air strikes on Hizbullah strongholds Thursday which killed 12 people, including an Iranian, and wounded 26.

The Syrian-backed Lebanese government Sunday rejected a United States demand to disarm all guerrillas, pledging not to disarm the Shiite militants until the last Israeli soldier leaves south Lebanon.

Six days of artillery duels in south Lebanon and the Bekaa Valley between Israeli troops and Hizbullah died down Sunday after forcing more than 14,000 villagers to flee their homes. Investment in Muslim republics

Saudi Arabian business conglomerate Dallah al-Baraka plans to set up a second development bank and three investment funds in Muslim republics of the former Soviet Union, a company spokesman said yesterday.

The company - which has assets of more than $6 billion in 43 countries - plans to launch three investment funds with an estimated capital of $100 million each in Kazakhstan, Uzbekistan, and Turkmenistan in a few months, said Younes al-Tamimi, the deputy director-general.

Saudi Arabia, along with Turkey and Iran, is pushing to establish influence in the Muslim former Soviet republics.

Mr. Tamimi says the intention is for the planned investment funds, which will also operate on Islamic principles, to channel foreign money into a broad spectrum of industrial and manufacturing projects identified by Baraka.