Prime Minister Benjamin Netanyahu rejected U.S. calls for a break in building Jewish settlements, saying Friday he was surprised by the sharp American response to his construction plans in the West Bank.

Secretary of State Madeleine Albright, who was not informed before Netanyahu announced the plans this week, has described the move as "not at all helpful."Netanyahu said Friday he did not mention plans to add 300 homes to the Efrat settlement in a telephone conversation with Albright hours before his announcement "principally because we didn't see it as any news."

"After all, this was a plan by the previous government," Netanyahu told American reporters at his office. "It does not deviate from any of the standing policies that we have. . . . I was surprised by the reaction."

Asked whether he would consider Albright's request for a settlement freeze, Netanyahu said: "I don't see anyone suggesting that construction be stopped in Arab communities that have natural growth as well."

The Netanyahu government has argued that it must continue to build to accommodate families' natural growth. However, government critics have said Netanyahu is luring Israelis to the settlement with generous grants and tax breaks made available to settlers.

Arafat's security forces arrested dozens of Hamas activists in the West Bank and Gaza Strip early Friday as part of a crackdown on Islamic militants sought by Israel and the United States. Palestinian officials did not have exact numbers, saying it was fewer than 100.

The move came a day after Arafat shut down 16 Hamas institutions, including a kindergarten and a sports club. The Palestinian leader acted after embarrassing Israeli evidence that four suicide bombers involved in July 30 and Sept. 4 Jerusalem bombings were from the West Bank village of Assira.

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Training for war?

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Israeli troops trained in the West Bank this week for a possible all-out war with the Palestinians, including the prospect of PLO fighters storming Jewish settlements, Israel Radio said.

In the West Bank town of Jenin this week, a senior PLO security official told Reuter News Service: "Israeli forces have been training with helicopters, tanks and troops near 21 settlements in the Jenin area following the deterioration in Israeli-Palestinian relations."

The Israeli army has in the past confirmed that it has contingency plans for a major confrontation.

"There can be no doubt the Israel Defence Forces are preparing for the worst," Israel Radio's military correspondent said Friday.

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