Israeli leaders Thursday rejected a proposal that U.N. observers be posted in the occupied territories to safeguard the Arab population.

Also Thursday, a 15-year-old and an 8-year-old Palestinian died after being shot by soldiers in overnight clashes, and the army lifted curfews on major population centers in the West Bank that had confined more than a million Palestinians to their homes since Sunday.The curfews were imposed to fight widespread rioting that broke out when an apparently deranged Israeli shot and killed seven unarmed Arabs.

Refugee camps and towns in the Gaza Strip remained under stay-at-home orders Thursday, except for three small villages.

PLO Chairman Yasser Arafat is expected to raise the idea of a U.N. observer force at a special session of the U.N. Security Council in Geneva Friday. On Wednesday, U.S. Secretary of State James A. Baker III said the United States is prepared to discuss the issue.

Baker's surprise statement was taken here as a further sign of Israel's deteriorating relations with the United States. Both Prime Minister Yitzhak Shamir's right-wing caretaker government and the opposition Labor Party rejected the idea of U.N. observers.

"We have always opposed the idea of stationing U.N. observers because we view it as a violation of Israel's sovereignty and an intervention in our internal affairs," said Shamir spokesman Avi Pazner.

Deputy Foreign Minister Benjamin Netanyahu said there was no need for a U.N. team because "there is already an abundance of observers." Journalists from all over the world, academics, congressmen and parliament members are already present, he told Israel radio.

The army has banned journalists and other independent observers from most of the occupied lands since Sunday, except those with army escorts.

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The mass-circulation Yediot Ahronot newspaper quoted unnamed senior ministers in Likud, Shamir's party, as saying President Bush is conducting a personal vendetta against Shamir. Pazner dismissed the report as "ridiculous."

Since the rioting erupted Sunday, 15 Palestinians have been killed in clashes with the army or in confrontations with Israeli civilians.

In the West Bank town of Ramallah, hospital officials said Mohammed Samir Salha, 15, died Thursday after being admitted with plastic bullet wounds in the head and chest. He was shot during an army raid on the village of Kibiya.

On Wednesday night, an 8-year-old Palestinian, Mustafa Awad El Fajem, was fatally shot in the head in the Gaza village of Bani Suheila. His death sparked an immediate protest.

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