RAMALLAH, West Bank, Oct. 12--A wrong turn. An infuriated Palestinian mob. The bloodied bodies of two Israelis dumped into the street as Palestinians cheered and flashed victory signs.

Hours later, Israeli attack helicopters reduced the police station to rubble and rocketed several other Palestinian buildings in retaliation for what Prime Minister Ehud Barak said was cold-blooded killing.

The attack on the soldiers Thursday was stunning in its brutality and is likely to sharply increase tensions between the two sides.

Meanwhile, a pair of suspected suicide terrorists on Thursday steered a small boat loaded with explosives alongside a U.S. Navy destroyer in Yemen and stood at attention as the small boat blew up, U.S. officials said.

The explosion opened a large hole in the hull of the USS Cole. At least six U.S. sailors were killed, and dozens of other Americans were injured or missing. The missing are presumed dead.

"Our prayers are with the families who have lost their loved ones, or are still awaiting news," President Clinton said.

Although U.S. military sources said the possibility of an accident also was being investigated, a senior Pentagon official told CNN "We have every reason to suspect it was a terrorist attack. There is no reason to suspect it was anything else."

Yemeni President Ali Abdullah Saleh, however, suggested a technical problem inside Cole caused the explosion. But he promised that his country--located on the southern tip of the Arabian Peninsula on the Red Sea--would help with an investigation and would punish anyone found responsible.

Clinton said he had directed officials from the Pentagon, State Department and the FBI to go to Yemen to begin an investigation. "If, as it now appears, this was an act of terrorism, it was a despicable and cowardly act. We will find out who is responsible and hold them accountable," he said.

"If their intention was to deter us from our mission of promoting peace and security in the Middle East, they will fail, utterly," Clinton said in the White House Rose Garden after meeting with his national security team.

The killing of the Israeli soldiers took place inside the Palestinian police station in the West Bank town of Ramallah. A mob of hundreds of Palestinians had rushed to the building after rumors spread that members of an Israeli undercover unit were being held inside.

About a dozen men climbed into the police station through a window and a few minutes later, gunshots could be heard.

Two men appeared at the window, sticking their bloody hands out.

The crowd roared with approval.

Italian private Mediaset TV broadcast footage of one of the soldiers dangling head down from a rope from a window. Crowds stood below waving fists and cheering.

Two people standing at a bloody windowsill inside of the police station then dropped the body.

A crowd quickly gathered by the body, some raising their fists in exultation. One man raised a window frame over his head and began bashing the soldier's body. The body of a second soldier was thrown out the door, witnesses said. Blood could be seen covering his face.

The Israeli army said two soldiers were killed, though Prime Minister Ehud Barak later announced, in an interview with CNN, that three soldiers were ``lynched and mutilated.''

Israel retaliated with rocket attacks and vowed to hunt down the killers.

``We will settle accounts with them,'' Amnon Lipkin-Shahak, Israel's transport minister, said on Channel Two television. ``We are going through the pictures and identifying each one, the civilians, the policemen, each one. We will settle accounts with them. It may take a day, it may take a week, it may take a year, but we will settle accounts with them.''

By nightfall, the Palestinian town of Ramallah was in darkness after Israeli helicopters blasted the town's generators.

Both sides were accusing the other of escalating the conflict.

``The peace process is over,'' Ramallah resident Mouhib Barghouti said as he watched Israeli helicopters rocket a second police station near Ramallah. ``It is too late to think about it now. The whole thing has gone too far. There is fault now on both sides.''

The latest incident began when the reserve soldiers made a wrong turn as they were driving to a military base and ended up in the Palestinian-controlled town of Ramallah, just north of Jerusalem.

The army said that a crowd of Palestinians identified the car's plates as Israeli and began chasing the men.

The army has two versions of what happened next: according to one, the reserve soldiers drove to a Palestinian police station in the center of town, where they took refuge. According to another, the police rescued them and brought them to the station for their own safety.

Barak had a third version: the police forced the men into the police station at gunpoint.

Word got out that the Palestinian police were holding several Israeli soldiers and that they may be part of an undercover unit that hunts Palestinian fugitives. The men were not in uniform, but that is not unusual for reserve soldiers, who usually get their uniforms only after they check in at the base.

An angry group of more than 1,000 Palestinians quickly surrounded the police station. At one point, people in the crowd began shouting: ``They've released them.''

That sparked some in the crowd to grab stones and glass bottles and hurl them at the station.

A senior police official was struck in the face and blood began to pour from his head.

The mob then smashed the gate to the police station.

Palestinian police tried to hold the crowd back, but they were also attacked, witnesses said. Palestinians said 15 policemen were hurt in the melee. Israel says that TV footage shows the policemen joining in the mob violence.

``I saw that people threw themselves on the body and I saw them pulling the body,'' said Ettie Wieseltier, a freelance Israeli TV producer who was at the scene with a foreign news team.

``I saw many people with knives. I saw a lot of knives with blood, and hands drenched in blood. And I saw them drag the body. I saw the knives and the anger in the eyes.''

The mob--some with bloodied hands--surrounded the bodies, some beating them with the broken bars of a window grille. One of the bodies was dragged out of the police compound and through the streets, witnesses said.

Two bodies were later handed over to the army. Military officials said they had been badly mutilated and one was beaten beyond recognition.

Hours later, Israeli helicopter gunships blasted Palestinian targets in the West Bank and Gaza, including the building housing PLO leader Yasser Arafat's elite Force 17 bodyguard unit and Tanzim, the armed wing of Arafat's Fatah faction. Six Palestinian navy boats were also destroyed.

Most of the buildings were evacuated before they were struck and there were no reports of casualties.

In Ramallah, Palestinian youth scattered as the Israeli helicopters darted overhead, firing rockets. The rockets shattered the top floor of the building. Smoke poured out of the building and a burning smell filled the air.

Moments after the helicopters left, dozens of youths rushed to the demolished police station and one planted a Palestinian flag in the rubble of the building.

``Out struggle is only beginning,'' they chanted.