Israeli Prime Minister Ariel Sharon said for the first time in public Monday that Israel has no intention of killing Palestinian President Yasser Arafat despite the Israeli government's vow to remove him from power.

Sharon also reaffirmed Israel's determination to press ahead with construction of its vast barrier in the West Bank, in defiance of U.S. and international pressure.

Israel drew an international outcry for its decision in principle last month to "remove" Arafat and for comments by Sharon's deputy Ehud Olmert that killing the symbol of Palestinian nationalism was an option.

"I don't see any plans to kill him although the man is responsible for deaths of hundreds, of thousands of mostly civilians because his strategy is a strategy of terror," Sharon told a group of European parliamentarians visiting Jerusalem.

"The security fence is not a political border. ... The fence is an additional means of preventing terror ... so we will continue building it," he added.

Palestinians say the fence is a land grab that cuts deep into territory they want for a state. Israel, which plans to extend the fence deep inside the West Bank, says it is intended to keep out Palestinian attackers.

Sharon's statement on Arafat followed weeks of speculation on how and when Israel might act on its threat to oust Arafat, accused by Israel of fomenting violence in the three-year-old uprising for independence, a charge he denies.

Sharon appeared to rule out exiling Arafat in an interview on Oct. 17, saying that would be damaging for Israel. But on Oct. 20, he said Israel was determined to "remove" Arafat.

Arafat, who has been confined by Israeli tanks to his West Bank compound in Ramallah for much of the past two years, has had health problems but doctors say he has no serious ailment.

CLASH ON ISRAEL-LEBANON BORDER

Adding to tensions in the region, Hizbollah -- a Lebanese guerrilla group backed by Syria and Iran -- fired rockets and artillery rounds at Israeli army positions in a disputed area of the Israel-Lebanon border. Israel hit back with two air strikes. The army said one soldier was lightly wounded.

Tensions have been high since Israel struck what it said was a training camp for Palestinian militants in Syria three weeks ago in the deepest attack on its neighbor in the past 30 years.

Israel blamed the latest exchange of fire on Syria and Iran. "Syria and Iran are clearly interested in escalation with Israel using the Hizbollah proxy," said Sharon adviser, Dore Gold.

The commander of Israel's army in the north, Major-General Benny Ganz, vowed to retaliate harshly after further attacks.

Also Monday, Israel said it planned to provide government services, including lighting and education services, to some Jewish settler outposts in the West Bank which it vowed to dismantle under a stalled U.S.-backed peace "road map."

The Palestinian Authority said the decision showed Sharon lied when he pledged to remove dozens of small enclaves built on occupied land without Israeli government authorization.

Most of the international community considers the estimated 50 outposts as well as about 150 established settlements in the West Bank and Gaza Strip to be illegal. Israel disputes this.

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