Deadly Tel Aviv Blast

An explosion at a money changer's shop in a crowded Tel Aviv business district Thursday killed two people and wounded about a dozen others, emergency officials said.

Police say the powerful explosion that rattled Tel Aviv was apparently a feud between criminals, reports CBS News Correspondent Robert Berger.

Witnesses said suspected Israeli underworld figure Zeev Rosenstein had just entered the shop when the explosion went off. Israeli media reported he was slightly injured.

"I saw him, he came to change money, as he went in, it exploded," an unidentified witness told Israel Radio.

Meanwhile, the Palestinian prime minister warned Israel against unilateral moves, such as seizing parts of the West Bank and Gaza Strip, saying it will never be accepted by the Palestinians.

"The fire will burn, the terror will grow," Palestinian Prime Minister Ahmed Qureia said in newspaper remarks published Thursday.

The attack on the shop named Change occurred about 12:30 p.m. in a crowded business district during lunchtime, witnesses said.

Cars on both sides of the road were damaged.

"I was next to it, the whole window blew out," an unnamed eyewitness told Israel Radio.

The explosion was one of the deadliest criminal attacks in the country's history.

Qureia's comments marked the harshest Palestinian response yet to Israeli Prime Minister Ariel Sharon's emerging plan of unilateral moves if peace efforts fail.

"It would be a terrible mistake to try and impose a solution on us by force," Qureia said in an interview with the Maariv daily newspaper, which published excerpts on Thursday. "The conflict will continue, the fire will burn, the terror will grow, no one will benefit from this."

In the Gaza Strip, four Palestinians were killed as Israeli troops raiding a refugee camp met with stiff resistance. Palestinian sources said three of the dead were bystanders. The army said it had killed at least one militant.

Sharon and his deputy, Ehud Olmert, have said unilateral steps would include dismantling some Israeli settlements, but have also made clear that Israel would never withdraw from all the West Bank and Gaza Strip, to the frontier that existed before the 1967 Mideast war.

Even before Sharon began floating the idea of unilateral steps, Israel began building a separation barrier that at points runs near the 1967 lines, but in other areas is to extend deep into the West Bank. The barrier is to keep out Palestinian militants who have killed hundreds of Israelis since 2000.

"If he (Sharon) wants to build a fence and use it to annex Palestinian land, this is unacceptable," Qureia said.

"This will not help, this will not succeed, this will cause a disaster. You cannot build a fence on our land, to cage us like chickens and hope all will be well," the prime minister told Maariv.

"If you want a fence, go ahead. Build it on the Green Line (border). In this instance we are prepared to contribute to the building costs. But to come and expropriate our land, to build the fence on Palestinian land, put us in cramped cages and then run away? We will never agree to this," Qureia said.

Qureia, however, said that he was confident that he could reach an agreement with Sharon. "I believe it is possible. We have to return to the negotiating table immediately. We need to renew the trust," he said.

But Olmert told The Associated Press on Thursday that peace talks were certain to break down because the Palestinian Authority refused to crack down on militant groups, as required by the U.S.-backed "road map" peace plan.

"If there is no agreement, I believe it is incumbent on Israel to take unilateral steps and to create a unilateral separation between us and the Palestinians," he said.

Under his plan, Israel would rid itself of land comprising a large number of Palestinians, but would remain in areas essential for security, Olmert said, declining to elaborate.

In the Gaza Strip, Israeli troops raided the Rafah refugee camp early Thursday, killing four Palestinians and wounding 12, hospital officials said.

Witnesses said troops had surrounded two houses, one belonging to a Hamas militant and the other a senior leader of the Islamic Jihad group. The military said it was looking for a top Islamic Jihad militant.

Residents of one of the houses resisted and dozens of gunmen rushed to join the battle, firing at troops and throwing hand grenades, residents said. The army said its troops came under heavy fire from light weapons and anti-tank missiles.

Four of the wounded were children, hospital officials said. Witnesses said schoolchildren leaving their houses were caught in the crossfire.

Palestinian Cabinet minister Saeb Erekat condemned the operation in Rafah.

"The Israeli policy of settlement expansion, building the wall, assassination and all the unilateral steps lead to one thing: enlarging the circle of violence," he said.