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JERUSALEM (AP) _ Israeli troops withdrew from a town in the Gaza Strip on Sunday morning, after killing a Palestinian they said was shooting at soldiers and demolishing the homes of three Islamic militants killed in attacks on Israelis dating back to 1996.

On Saturday a 16-year-old Palestinian was shot and killed and another boy was wounded while nearing a border fence on their way home from school in the Gaza Strip, witnesses and hospital officials said.

Later on Saturday, about 30 Israeli tanks and armored vehicles backed by two Apache helicopters moved into the Gaza town of Beit Lahiya, firing machine guns and tank shells that knocked out the town's power transformer, witnesses and Palestinian security officials said.

Palestinian witnesses said there were fierce exchanges of fire between Palestinians and Israeli troops during the three-hour incursion, but they said the dead man was an innocent bystander, watching events from the balcony of his home.

The army said the force demolished the homes of three Islamic militants who were responible for killing 24 Israelis. The homes included that of Hisham Dab, an Islamic Jihad suicide bomber who killed 20 Israelis in a March 1996 attack in Tel Aviv.

It said the other two homes belonged to the families of Ahmed Hamuda, a Hamas gunman who killed three Israeli soldiers in a June attack on a Jewish settlement in the Gaza Strip and to Jihad Masri, also of Hamas, killed during an attack on a settlement in December.

Separately, Israel's new Labor Party leader, Amram Mitzna, was sending a representative to Cairo for talks Sunday with Egyptian Foreign Minister Ahmed Maher in one of his first acts at the helm of Labor.

Palestinian Cabinet Minister Saeb Erekat also was due to meet with Maher in Cairo on Sunday. But Israeli and Palestinian officials dismissed speculation that Erekat would meet with Mitzna's envoy, Labor lawmaker Yossi Katz.

Mitzna has won some praise among Palestinians for saying he would pull settlers and soldiers out of the Gaza Strip and would restart negotiations with the Palestinians if elected prime minister in Jan. 28 elections.

Polls indicate incumbent Prime Minister Ariel Sharon and his Likud Party will win the vote. Sharon says all violence must stop before peace talks resume.

In violence Saturday, witnesses said several schoolchildren were walking about 700 yards from an Israeli army outpost at the Karni Crossing east of Gaza City when soldiers fired at them.

A 16-year-old boy died after he was hit in the abdomen and leg, hospital officials said. A second boy was hit with a bullet in the back, they said, and was hospitalized.

Military sources said soldiers fired warning shots in the air at the teens when they neared a border fence but didn't think anyone was injured. They said an investigation was started after learning that someone had been killed.

The army said it has arrested 55 Palestinians suspected of militant activity over the past two weeks, including five senior leaders. Eight were planning to carry out suicide bombings, the army said.

Among the leaders arrested was Majid Masri, 28, head of the Al Aqsa Martyrs' Brigades in the West Bank town of Nablus, who was nabbed Friday.

Masri, who also used the name Abu Mojahed, also was a spokesman in the West Bank for the group, which is linked to Palestinian leader Yasser Arafat's Fatah movement.

A United Nations spokesman, meanwhile, said the world body has formally demanded that Israel thoroughly investigate the death of a British U.N. official by Israeli soldiers and punish those responsible.

Iain Hook, a project manager in UNRWA, the U.N. agency helping Palestinian refugees, was shot and killed Nov. 22 during a firefight between Israeli soldiers and Palestinian gunmen in the Jenin refugee camp.

Israel has admitted its soldiers killed Hook but said they fired on the walled U.N. compound because Palestinian gunmen were firing at them from inside, and because they thought Hook was carrying a gun.

U.N. Secretary-General Kofi Annan sent a letter to Sharon on Wednesday conveying his ``outrage'' at the death, and saying he expected Israel ``to carry out a rigorous investigation of the incident, share its results with the United Nations, and hold accountable those responsible,'' said a U.N. spokesman in New York, Farhan Haq.

In Gaza's Bourrej refugee camp, Jamal al Dura showed off his newborn son, Mohammed, named after al Dura's 12-year-old boy who was killed on the second day of the Palestinian uprising. The death, captured on television, galvanized Palestinians and turned the slain Mohammed into a symbol of the conflict.

Al Dura said he felt blessed by his newborn son but he would sacrifice more of his children to fight Israel.

``There will be no security for them as long as we have occupation,'' al Dura told Associated Press Television News. ``We're ready to give more of our children.''