HEBRON, West Bank (AP) _ Palestinian officials have arrested a Hamas activist and former chemistry student who stashed nearly a ton of explosives in his home right next to Palestinian police headquarters on the outskirts of Hebron.

Hamas founder Sheik Ahmed Yassin, meanwhile, acknowledged that the Islamic militant group was having trouble making good on threats to carry out attacks against Israelis in retaliation for the killing of two Hamas fugitives by Israeli soldiers last month.

Yassin said Palestinian and Israeli security forces had stepped up their campaign against Hamas. However, a Hamas ``response will come at the appropriate time, even if it is delayed,'' Yassin told a news conference in Gaza City.

In the Israeli-controlled center of Hebron, troops enforced a curfew today that was imposed after an assailant, apparently a Palestinian, threw two hand grenades at Israeli troops Wednesday, injuring 11 soldiers and 11 Palestinian passers-by.

Israeli soldiers also sealed the Palestinian-run parts of town, barring Palestinians from entering or leaving. Hebron is home to 450 Jewish settlers and 130,000 Palestinians.

The assailant had escaped into the Palestinian-controlled sector, apparently after being shot in the leg by an Israeli soldier. Israel filed a sharp protest with the Palestinian Authority, saying it must do more to catch the fugitive.

The attack boosted Prime Minister Benjamin Netanyahu's claims that Palestinian leader Yasser Arafat is not cracking down hard enough on Islamic militants. Netanyahu says he will not hand over more West Bank land until Palestinians rein in militants.

The Hamas bomb factory was located in a two-story home several yards from Palestinian police headquarters, a fortress-like building on a hill on the outskirts of Hebron.

During a raid Monday, some 1,750 pounds of explosives were seized and a resident of the building, Hisham Sharabati, was arrested, a Palestinian intelligence official said today.

Sharabati is a former chemistry student who spent 10 months in an Israeli jail, said his father Hamdan. The elder Sharabati denied that his son had hidden explosives in the ground-floor storage area. Hamdan Sharabati said his son sold cosmetics and stored some of the materials used in making the merchandise in the house.

Sharabati's brother, Adel, was briefly detained for questioning, but released.

Over the Jewish holiday of Yom Kippur, which ended at sundown Wednesday, Israel sealed its borders with the West Bank and Gaza Strip to prevent possible violence. The closure was gradually eased today to allow several thousand Palestinians to return to jobs in Israel.

Also today, Netanyahu briefed his Cabinet on his meetings in the United States with Arafat and President Clinton earlier this week.

Israeli and U.S. officials have been upbeat, suggesting that Israel and the Palestinians had basically resolved their differences on an Israeli troop pullback from 13 percent of the West Bank.

However, Palestinian negotiators said Wednesday that some differences remained. Hassan Abdel Rahman, the Palestinian representative in Washington, said one point of contention was whether Palestinian police could enter the nature reserve.

U.S. Secretary of State Madeleine Albright and U.S. envoy Dennis Ross are to return to the region Tuesday to prepare another Mideast summit in Washington in mid-October, Palestinian negotiators said.