GAZA CITY, Gaza Strip, Nov. 15 (AP) - Israeli soldiers killed eight Palestinians in bitter clashes Wednesday, the highest death toll in nearly a month. There were no celebrations to mark what Palestinians see as their symbolic independence day--only more funerals and more violence.

Palestinian leader Yasser Arafat, who had promised his people independence this year, avoided mention of the anniversary, but other prominent Palestinians said they would not stop fighting until they have a state.

The intense fighting was a sad contrast to the funeral of Leah Rabin, widow of Prime Minister Yitzhak Rabin. The Israeli leader was assassinated five years ago by a Jewish extremist who opposed his peace initiatives. Mrs. Rabin died Sunday of cancer.

First lady Hillary Rodham Clinton--the newly elected U.S. senator from New York--headed a list of dignitaries and ambassadors at the funeral, but no Arab leaders attended. Mrs. Rabin was a peace activist in her own right, carrying on her husband's drive for an end to the Israel-Arab conflict.

In what appeared to be a gesture to the Israeli people, Arafat gave a videotaped eulogy that was broadcast on Israeli television. He said, "I put with all the respects a flower from Palestine on your coffin, renewing my commitment for peace." The eulogy was not broadcast on Palestinian television.

But exchanges of gunfire, not talk of peace, set the tone Wednesday.

"The political rhetoric has been replaced by field action," Palestinian spokeswoman Hanan Ashrawi said in apparent reference to recent Palestinian ambushes of Israeli soldiers and settlers on roads in the West Bank and Gaza Strip.

"In a sense, the army of occupation and the settlers have become legitimate and select targets of Palestinian resistance," she said.

Arafat emerged briefly from his seaside office in Gaza City to make a terse plea for the international community to "push the peace process forward."

Arafat has repeatedly pledged that this year would bring Palestinian sovereignty, but the current hostility has eliminated any chance of a negotiated settlement for now. He has also backed away from unilaterally declaring an independent state.

Israel, which suspended peace talks amid the violence, said it would not resume negotiations until calm is restored.

"We are in the middle of a march of folly, and this tragic situation needs to be brought to an end," said Israeli Foreign Minister Shlomo Ben-Ami.

The anniversary came as Israel enforced a tight blockade of Palestinian communities for a second day Wednesday, paralyzing normal life in the West Bank and Gaza.

As the crisis dragged on, President Clinton said his biggest regret of his presidency may be his inability to reconcile Israel and the Palestinians.

"I really wanted with all my heart to finish the...peace process," Clinton said in Brunei, where he was attending an economic summit.

Eight Palestinians were shot and killed Wednesday by Israeli forces--two at the Karni crossing between Israel and Gaza, two in the West Bank town of Tulkarem, one each in Hebron, Qalqilya, Jericho and Jenin, doctors said, after clashes that featured Palestinian rock-throwing, firebombs and gunshots.

Israeli forces responded with rubber-coated bullets and live fire. It was the highest toll since nine Palestinians died on Oct. 20.

Another Palestinian died Wednesday in Gaza of wounds sustained the night before. Also, at least 36 Palestinians were wounded Wednesday, according to hospital officials.

A total of 219 people have been killed, most of them Palestinian teenagers and young men, since the fighting broke out at the end of September.

Palestinians also buried two youths killed by Israeli gunfire Tuesday, 13-year-old Mohammed Ijla from Gaza City and 15-year-old Fader Barsh from the West Bank refugee camp of Al Amari.

In both instances, thousands of mourners carrying Palestinian flags poured into the streets, and those with pistols and automatic rifles repeatedly fired shots into the air in a show of defiance.

"Why was Mohammed killed? He knew that all the people want a state," said the teen-ager's uncle, Arafat Ijla. "It's time for our state."

Israeli Prime Minister Ehud Barak called a meeting of his security Cabinet on Wednesday to discuss Israel's response to recent ambushes by Palestinians. Four Israelis were killed in drive-by shootings Monday, the highest one-day death toll for Israelis since the violence began.

Barak is under growing public pressure from Israelis to retaliate harshly, but apparently fears that a major strike will reduce the chance of resuming peace talks, which he says remains his ultimate goal.

Barak's senior policy adviser, Danny Yatom, said Wednesday that "it is possible we may rethink the policy of restraint we adopted in recent weeks."

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