The latest attempt at a "peace summit" between the leaders of Israel and the Palestinians was postponed until further notice after fierce fighting in a refugee camp in the southern Gaza Strip. Israeli forces pulled out of Rafah Wednesday after killing nine Palestinians and demolishing a three-story building that had concealed a tunnel used for smuggling weapons from neighboring Egypt. The tunnel also was destroyed.

US forces ushered in Christmas in Iraq with an aerial and artillery bombardment of hiding places used for attacks by insurgents under cover of darkness. But despite Operation Iron Grip in an area of southwest Baghdad, terrorists killed three more American soldiers, detonated a car bomb in a busy Baghdad traffic tunnel, and exploded another outside an Interior Ministry building in the northern city of Irbil. In all, the Christmas Eve casualties were put at nine deaths and more than 50 injuries.

Tensions rose again between China and Taiwan Wednesday as the Beijing government announced the arrest - and confessions - of 43 people in a "ring of intelligence agents." It did not identify those involved - 24 of whom were said to be Taiwanese - or explain what they had confessed to. Taiwan's government dismissed the report as "rumors" calculated to embarrass President Cheng Shui-bian, who is a candidate for reelection in March.

In a deal with hard-line Muslim political opponents, with whom he has been feuding for months, Pakistani President Pervez Musharraf announced he'll step down as chief of the Army by the end of next year. In return for the halting of tactics that have blocked almost all legislation in parliament, Musharraf also agreed to scale back the special powers he reserved for himself after seizing control of the government in 1999. He'll remain as president but must seek a vote of confidence from the legislature within a month of giving up his Army post. The hard-liners promised not to vote against him at that time.

Police foiled a plot by Basque radicals to explode two bombs aboard a train in one of Spain's busiest terminals as people were preparing to travel home from Madrid for Christmas Wednesday. One device was hidden in a suitcase, the other in a backpack. Two suspected members of the separatist group ETA were arrested, and a timer, a disguise, and a handgun were seized. Attacks by ETA have dropped this year with the arrests of two reputed chiefs and about 160 of their followers.

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