ME peace process stalled, says Annan

The pair were shot dead when they attacked an army position near the Karni crossing point into Israel, a joint statement from two Palesti-nian militant groups said.

The statement from Ezzedine al-Qassam Brigades, the armed wing of the radical Islamist movement Hamas, and the Abu Rish group, linked to the Fatah faction of Palestinian leader Yasser Arafat, identified the dead men as Mohammed Suleiman Abush and Said Mahmud Narish, both 20.

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Israeli army sources said troops saw two "suspect silhouettes" in a prohibited area approaching the security fence dividing the two territories and opened fire, hitting them both.

The deaths bring to 3,830 the number of peopled killed since the September 2000 outbreak of the Palestinian Intifada, or uprising, including 2,876 Palestinians and 886 Israelis.

The latest violence followed blunt words from UN chief Annan on the deteriorating conditions for finding a peace settlement.

"The situation on the ground has once again been shaken by a wave of violence," Annan said Friday, criticising Israeli incursions and house demolitions as well as Palestinian attacks on Israeli civilians.

"There has been no discernible progress in peace efforts," he said. "The lack of any tangible progress towards a peaceful settlement has raised the level of hopelessness and despair among ordinary Palestin-ians and Israelis."

Annan hailed Israeli Prime Minister Ariel Sharon's announced plans for a unilateral withdrawal from the Gaza Strip in the absence of progress in peace talks, despite fears that the move could play into the hands of Palestinian extremists.