JERUSALEM (AP) _ Cries for revenge rang out Sunday as thousands of Jewish settlers thronged the funeral of American-born Binyamin Kahane, son of the slain extremist Rabbi Meir Kahane, only hours after he and his wife were killed in an ambush-style attack in the dry hills of the West Bank.

As the mourners marched through the streets of Jerusalem, a few hundred of them turned the funeral procession to a display of fury. They smashed windows, chased and beat Palestinians they encountered and shouted ``Death to Arabs!''

Palestinians, meanwhile, accused Israel of carrying out what they called the deliberate assassination of a longtime associate of Yasser Arafat. Thabet Thabet, a senior activist in Arafat's Fatah faction, was gunned down outside his home in the West Bank town of Tulkarem.

The Israeli army said Thabet died in an exchange of fire; Palestinians said he was backing his car out of his driveway when men they believed were special Israeli forces drove past and sprayed him with gunfire. Israel has said it is targeting activists it considers responsible for attacks against Israelis, but made no such acknowledgment in this case.

The high-profile killings _ together with the two sides' sharp disagreements over terms of a U.S. peace plan _ add yet more complications to President Clinton's hopes for a Mideast agreement before he leaves office in three weeks.

The violence of Jewish settlers' rhetoric _ aimed as much at Prime Minister Ehud Barak as at the Palestinians _ illustrated the dramatic difficulties the Israeli leader faces in his fight to win an accord before Feb. 6 elections that are effectively a referendum on his peace policies.

At the funeral for the 34-year-old Kahane and his 31-year-old wife, Talia _ killed when gunmen fired on their car early Sunday, sending it crashing into a ditch and injuring five of their children _ his brother Baruch delivered the eulogy in a cracking voice, chanting as if in biblical cadences.

``Take your fate in your own hands,'' he told a crowd of 2,000 people, many of them Jewish settlers like the Kahanes. ``This government that negotiates with murderers must be brought down, over the dead bodies of my family.''

Afterward, there were chaotic scenes as mourners marched to the cemetery on foot, on a route that took them through the city as night fell. ``Revenge, revenge!'' some cried, while others chanted psalms.

At one point, the crowd smashed the windows of a car driven by two Palestinians, with a miniature replica of a disputed shrine dangling from the mirror, and an ambulance had to pluck the occupants to safety. ``Move back!'' police shouted at the crowd through loudspeakers.

Barak denounced the morning's deadly attack on the Kahanes, then met with his Cabinet, which said afterward that if the Palestinians do not accept the U.S. proposals as a framework for negotiations, Israel will ``take a time out'' in the peace process.

Israel has accepted the Clinton plan as a basis for talks, albeit with grave misgivings. The Palestinians say they are awaiting clarification from Clinton on a number of points.

``The issues at hand are very complex,'' said senior Palestinian negotiator Saeb Erekat, in neighboring Jordan for talks. ``We're still studying the ideas.''

The Kahane killings came one day after Arafat's Fatah movement urged followers and fighters ``to struggle against Israeli soldiers and settlers'' for the next two weeks to honor Fatah's anniversary.

In the Lebanese capital of Beirut, a group calling itself the ``Martyrs of the Al Aqsa Intefadeh'' faxed a claim of responsibility for the attack to a Western news agency in Beirut. Its authenticity could not be verified.

The group, whose name refers to a holy site central to the Israeli-Palestinian dispute, has claimed responsibility for several attacks against Israelis since the current violence broke out in late September.

The Kahanes' car was fired on as it passed the Palestinian village of Ein Yabroud near the West Bank Jewish settlement of Ofra, the Israeli army said.

The couple had just dropped one of their six children off at school; the five youngsters in the car with them, ranging in age from 2 months to 10 years old, were hurt, one seriously, the hospital said.

After the shooting, Israeli troops converged on the area, sealing off the Palestinian village and scouring the dusty hills.

Kahane's father, Meir Kahane, who headed the now-outlawed Kach movement that advocated expelling Palestinians from the West Bank and Gaza Strip, was shot and killed in 1990 after a speech in New York.

After the elder Kahane's assassination, Binyamin Kahane founded the anti-Arab Kahane Chai, or Kahane Lives, movement, now also banned in Israel. A New York native, he lived in the West Bank settlement of Tapuah and ran a religious school, or yeshiva, that espoused his father's beliefs.

Through much of the 14-week-old outbreak of violence _ which has killed nearly 350 people, most of them Palestinians _ Palestinian gunmen have been staging roadside ambushes targeting Jewish settlers in the West Bank. Some Palestinian officials as much as said it was open season on the settlers.

``There will be no security ... for any Israeli settler on Palestinian land,'' Imad Falouji, Arafat's communications minister, told The Associated Press. ``We advise them to leave our land peacefully before they leave it in coffins.''

Israel radio said it was unlikely Kahane was specifically targeted, but that gunmen would have known when settlers were likely to be traveling on the road.

In his peace plan, Clinton is seeking deep and painful concessions from both sides. He called for Israel to concede Arab parts of Jerusalem, including control of Judaism's most holy site, the hilltop known as the Temple Mount. Muslims revere it as the Haram as-Sharif _ the Noble Sanctuary _ from which the prophet Mohammed ascended to heaven.

In return, Palestinians would scale back demands on the ``right of return'' for millions of Palestinian refugees and their descendants who fled or were driven from homes in Israel during the country's war of independence and subsequent fighting.