GAZA (Reuters) - The main Palestinian militant group Hamas said on Wednesday a cease-fire declared under international pressure to advance a peace plan would unravel if Israel did not free thousands of prisoners.

Another threat to the U.S.-engineered plan lay in discontent within the mainstream Palestinian movement Fatah over Prime Minister Mahmoud Abbas´s perceived failure to win reciprocal Israeli gestures for arranging the cease-fire.

The truce declared by major Palestinian factions on June 29 has been rattled by violence, including Israel´s killing of a Palestinian man in West Bank raid on Wednesday and a Palestinian suicide bombing that killed an Israeli on Monday.

Monday´s bombing was the first such attack since the truce and Hamas´s founder and spiritual leader, Sheikh Ahmed Yassin, said that while it remained committed to the pact, militants could not stick to it unless jailed comrades went free.

"Our patience has its limits. Israeli practices (including) the issue of the prisoners, are a red line that can never be bypassed in any way or form," Yassin said after talks with Egyptian security officials trying to shore up the truce.

Israel has said it would free hundreds of Palestinians but set tough terms, ruling out the release of militants allegedly involved in a campaign of suicide bombings and ambush attacks.

That would effectively exclude most of up to 8,000 arrested since an uprising for independence began in September 2000.

"The Israeli enemy has to abide by (conditions) in our (cease-fire) initiative. It must shoulder its responsibilities so things will not return to what they were in the past," Yassin said, alluding to a cycle of tit-for-tat attacks.

MILITANTS´ TERMS DISMISSED BY ISRAEL

Militant leaders attached terms for adherence to the unilateral three- month truce including a release of comrades.

The Israeli government dismissed such terms, saying it dealt only with Abbas´s Palestinian Authority, but it has freed some prisoners and withdrew some forces in Gaza and the West Bank.

Some local militant cells have refused to abide by the truce proclamation, citing the prisoner issue among others, and a suicide bomber dispatched by a cell of Islamic Jihad based in the West Bank town of Jenin killed an Israeli woman on Monday.

Israeli military sources said the Palestinian man was shot dead outside Jenin after he opened fire on soldiers carrying out a raid that netted his brother, a wanted militant.

About 2,000 demonstrators marched through Jenin afterward holding up photographs of relatives rounded up by Israeli troops in raids. "No truce without the release of all prisoners in Israeli jails, without exception!" they chanted.

A delegation of senior security and intelligence from Egypt, which helped broker the truce, planned a series of meetings with Islamist and Fatah faction leaders in Gaza into the evening.

"The Egyptians are here to calm things down and help the truce endure," said one Palestinian official.

Hard-liners in Fatah´s Central Committee have confronted the moderate Abbas over his failure to persuade Israel to free all prisoners, a step that would help him reduce the popular appeal of militants loath to abandon attacks on Israel.

Abbas told reporters on Wednesday he was not considering quitting despite accounts by Fatah officials to the contrary and called on Israel to free all detainees "as soon as possible."

Israeli media said John Wolf, Bush´s envoy overseeing steps on the road map, was pressing the Israeli government to free a larger number of prisoners to help Abbas see off hardline foes.

Israeli officials dismissed the reports and sharpened calls on Abbas to dismantle militant groups as mandated by the road map to a Palestinian state in the West Bank and Gaza by 2005.

Abbas has shied from such a crackdown, fearing civil war. (© Reuters 2003 07/09/03)