Doctors and Hamas sources said Rantissi, who helped found Hamas in the late 1980s, was in "good" condition but a woman and an 8-year-old girl, who were passing by, were killed.

From the account given by the source, while the arrogant attitude of the Israeli delegation had irritated the American side, the Palestinians, on the countrary, have left a positive impact.

At the advance request of Israel at the summit, Bush's aides had put security problems at the top of the agenda for discussion. "The first thing that Bush was required to talk about was security", the participant said, adding, "It was a request of the Israelis. So [Bush] asked (Palestinian security chief Mohammad) Dahlan to give a briefing".

According to the source, Dahlan gave an excellent five-minute synopsis of the situation, and concluded by saying to Bush: "There are some things we can do and some things we cannot. We will do our best. But we will need help."

Defence Minister Shaul Mofaz burst in at the end of Dahlan's presentation and said: "Well, they won't be getting any help from us; they have their own security service".

You could see that Bush was irritated, the participant said, and Bush turned on Mofaz angrily: "Their own security service? But you have destroyed their security service".

Mofaz shook his head and said: "I do not think that we can help them, Mr. President," - to which Bush said: "Oh, but I think that you can. And I think that you will."

Then Bush turned to Abbas - again according to a script insisted on by the Israelis - and said: "Mr. Prime Minister, perhaps you could give an overview of the situation in the West Bank and Gaza".

Abbas outlined the increasingly dire situation of the territories, saying that the humanitarian crisis was deepening, and that while recent actions of the finance minister had eased the problems, the insertion of new funding was necessary.

Sharon then interrupted and said: "The insertion of new funding must be dependent on your good behavior." Bush was again visibly irritated: "You should release their money as soon as possible. This will help the situation."

After that meeting, Bush turned to National Security Adviser Condoleezza Rice and said, "We have a problem with Sharon I can see, but I like that young man [Dahlan] and I think their prime minister is incapable of lying. I hope that they will be successful. We can work with them."

Bush was also pleased with the determination with which Abbas rebuffed pressure from his ministers, Nabil Sha'ath and Yasser Abed Rabbo, to toughen the language of the Abbas speech, which he had agreed upon with the American delegation before the summit.

They said it would cause trouble in the Palestinian Authority. They argued heatedly with Abbas about his comments, at one point in front of the president. But Abbas insisted that his remarks follow the outlines set out by Bush.

Meanwhile, Italian Prime Minister’s refusal to meet with Palestinian leader Yaser Arafat is likely to create a diplomatic row between the European Union and the Palestinian Authority, sources said.

They confirmed that Mr. Abbas would turn down meeting with Mr. Silvio Berlusconi, who is in the European pro-Iraqi war camp, unless he meets Mr. Arafat in his besieged bunker in Ramallah.