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Israel Says Iran Pressing Militants to Attack

JERUSALEM, Aug 18 (Reuters) - Israel's Deputy Defence Minister Ephraim Sneh accused Iran on Friday of encouraging Islamic militants to launch wide-scale attacks against Israel.

Sneh's remarks followed a U.S. State Department warning on Wednesday that there was "an increased possibility for terrorist attacks" and advising Americans to avoid use of public buses and act with caution in crowded areas.

Sneh said Iran has made a strategic decision to encourage militant Palestinian groups, such as the Hamas and Islamic Jihad, to launch bomb attacks against Israeli targets.

The groups have killed scores of people in attacks on buses and public squares in Israel in an apparent effort to torpedo peace moves.

"What we know is that Iran is pressuring extreme groups, Hamas, Islamic Jihad and Hizbollah and a few others, to carry out major murderous attacks," Sneh told Army radio.

He advised Israelis to keep an eye out for suspicious packages left in Israeli streets which might contain a bomb.

Large numbers of Israeli police and soldiers were deployed in the streets of Jerusalem on Friday.

Security was beefed up at crowded areas attacked by Islamic militants in the past including the main bus station, an open-air produce market and an outdoor shopping mall.

Prime Minister Ehud Barak told Israelis they did not need to take special precautions despite the security warnings.

"We don't live in America or in Western Europe. But the public has no need at the moment to be any more prepared than they usually are," Barak told Israel Radio on Friday.

The Palestinian Authority's preventative security chief in the West Bank, Jibril al-Rajoub, said on Thursday that the U.S. warning was "nothing more than propaganda."

U.S. ENVOY ON MISSION TO BRIDGE GAPS

U.S. Middle East envoy Dennis Ross was due to hold separate meetings with Barak and senior Palestinian negotiator Saeb Erekat on Friday to reassess the chances of convening a new Middle East peace summit.

The U.S.-sponsored Camp David peace summit ended last month in disagreement, mainly over the fate of Jerusalem. But the sides have said they are hopeful they can still strike an agreement by a September 13 target date.

On Thursday Ross met Israel's chief negotiator, acting Foreign Minister Shlomo Ben-Ami. A diplomatic source said Ben-Ami told the U.S. envoy that another summit would be possible only if the Palestinians showed more flexibility.

Palestinians blame Israel for the impasse.

Palestinian President Yasser Arafat has vowed to declare an independent state as early as September 13. The Palestinian leader has travelled to more than 18 countries in three weeks to try to shore up international support for his stance.

Japan's Prime Minister Yoshiro Mori told Arafat in Tokyo on Friday that it would not be wise for Palestinians to unilaterally declare an independent state and urged him to continue peace talks with Israel.

Mori told Arafat that Japan would only recognise a Palestinian state if it was established as part of a peace agreement with Israel.

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