JERUSALEM (AP) _ Israeli troops and Palestinian gunmen waged fierce shootouts Monday in and around biblical Bethlehem, and an explosion killed an Islamic militant in the Gaza Strip, apparently as he was preparing to plant a bomb.

Former Israeli leader Benjamin Netanyahu returned home from the United States amid feverish speculation he is planning to run again for prime minister.

Israel's political turmoil, which has forced Prime Minister Ehud Barak to agree to early elections, and the ongoing violence, which has claimed nearly 300 lives, appeared to feed off one another as the region endured another tense day.

On the political front, Netanyahu touched down at Ben-Gurion airport near Tel Aviv after a lengthy trip to the United States and was immediately mobbed by journalists asking if he would run for prime minister. He refused to give a clear answer.

``I held talks in the United States with some of Israel's best friends and they expressed worry about Israel's situation,'' Netanyahu said. ``This worry is shared by many Israeli citizens, not an insignificant number of whom have turned to me in recent months requesting that I return to the leadership of the country.''

Netanyahu retreated from public view after being trounced by Barak in an election 18 months ago. He has spent much of his time in the United States. His three years in office, from 1996-99, were marked by constant friction with the Palestinians and sporadic outbursts of violence.

But the current Palestinian uprising has left many Israelis disillusioned with Barak and his handling of the peace process. Netanyahu currently holds a double-digit lead over Barak, according to opinion polls.

Netanyahu has yet to enter the race, but said he would meet with ``people from all parts of Israeli society, in order to make the right decision.''

Meanwhile, Israeli-Palestinian gun battles raged for several hours before dawn Monday near a Jewish shrine in Bethlehem, a West Bank town controlled by the Palestinians.

The Israeli army said Palestinian gunmen attacked the shrine, revered by Jews as Rachel's Tomb, the burial site of the biblical matriarch, from three sides and apparently tried to take it over. Palestinians said the fighting broke out after soldiers and Jewish settlers attacked Muslim worshippers.

The confrontation lasted hours. At one point, Israeli helicopters aiming at Palestinian gunmen fired two rockets at the Aida refugee camp near Bethlehem in the West Bank, the army said.

Fourteen Palestinians were injured in fighting in the Bethlehem area on Sunday and early Monday, Palestinian hospitals said.

Palestinian leader Yasser Arafat, returning from a visit to Qatar, said the Israeli shelling ``was a shock because we had agreed to cool down the situation.''

Dressed in his trademark military fatigues and checkered headdress, the Palestinian leader carried a holstered German-made machine pistol in his left hand as he reviewed an honor guard outside his Gaza City office.

A visibly upset Arafat said he was carrying the weapon because Jewish settlers blocked Gaza's main north-south thoroughfare, the road he had to travel to reach Gaza City.

Israel army radio said settlers tried to throw stones at Arafat's convoy as it passed through the Gaza Strip. The army said only that it removed settlers from the roadside. Police detained some of them.

During decades in exile, Arafat regularly wore a pistol, and sparked a major controversy when he wore it during a speech to the U.N. General Assembly in 1974. But until Monday, he had not been seen with a gun in public since he returned to the Palestinian areas in 1994.

Arafat, who is constantly surrounded by a large contingent of bodyguards, appeared to be carrying the weapon merely as a symbolic gesture. ``It's upsetting that they open the road to allow Arafat to pass,'' said Ronit Haratz, one of the demonstrators. ``Every time there is an attack, they close the road for a while, and they reopen it and there is another attack.''

Israeli troops closed Gaza's main north-south road to Palestinian traffic two weeks ago following a roadside bombing that killed two Israeli adults and wounded several children riding on a school bus. Reopening the road Monday, the army cited relative calm in the area.

The military also lifted a blockade around the Palestinian town of Qalqilya in the West Bank. Since shortly after the rioting started Sept. 28, Palestinian cities and towns have been encircled by Israeli troops, preventing people from traveling.

Meanwhile, Awad Silmi, 28, a member of the radical Islamic movement Hamas, apparently blew himself up with a bomb and was found dead by Palestinian security forces in Gaza near the Jewish settlement of Netzarim, Hamas said.

Silmi was suspected of killing an Israeli soldier in Gaza, and had been jailed by the Palestinian Authority for four years before being released recently, said Hamas spokesman Ismail Abu Shanab.