HIGHLIGHTS|| 10 Factories Blown up & 14 Palestinians Injured in Khan Yunis || Arafat Urges Resistance Groups to Stop Attacking Israeli Civilians Ahead of Israeli Elections Later This Month|| House of Palestinian Martyr Destroyed in Beit Hanoun|| Likud's Election Lead Slips|| STORY: The Israeli occupation army raided a major city in the Gaza Strip, blew up 10 factories and killed at least one Palestinian in battles with resistance men on Sunday, witnesses said, less than three weeks before a pivotal Israeli election.

The incursion unfolded as right-wing Israeli Prime Minister Ariel Sharon sought to defuse a funding scandal that has shifted public attention away from security issues and unraveled his Likud party's huge lead in pre-election polls.

Palestinian President Yasser Arafat's cabinet urged resistance groups on Saturday to stop attacking Israeli civilians ahead of the election, hoping to boost underdog left-wing Labour party challenger Amram Mitzna who unlike Sharon wants to reopen peace negotiations focusing on Palestinian statehood.

Dozens of Israeli tanks thrust into the Palestinian-administered Gaza city of Khan Younis just before midnight and, backed by helicopter gunships, waged battles with Palestinian resistance men that left one dead, witnesses said.

Hospital officials said 14 Palestinians were wounded.

Israeli occupation troops also dynamited 10 adjoining metalworks, local security sources said.

Israeli tanks also entered the Gaza town of Beit Hanoun early on Sunday where troops demolished the family home of an Islamic Jihad resistance man killed last month, witnesses said.

Israeli forces pulled out of Khan Younis and Beit Hanoun after several hours, Palestinian witnesses said.

CALLS FOR RESTRAINT

Arafat has repeatedly called on resistance groups to halt resistance bombings and other attacks on Israeli civilians in the uprising but Palestinian factions have failed to agree on a truce.

"Attacks against Israeli civilians have severely harmed our cause in the international arena and in Israeli public opinion," the Palestinian cabinet said in statement, rejecting "all acts of violence that target Palestinian and Israeli civilians."

"As the Israeli election date (January 28) is getting closer, we appeal to all our people to practice self-restraint," it said.

LIKUD'S ELECTION LEAD SLIPS

Likud's election lead began to slip last month amid allegations of vote-buying and ties to organized crime during a party primary to choose its list of candidates.

But its popularity nose-dived this week after the left-wing Israeli daily Haaretz broke the story of a probe into a DLRS. 1.5 million loan to Sharon's son from a South African businessman, allegedly to pay back funds from Sharon's 1999 campaign.

Israeli law bans political funding from abroad.

Before the scandals broke, Likud was expected to become the largest party in parliament with up to 41 seats in the 120-member Knesset. But weekend opinion polls forecast it taking 27-30 seats, not much better than Labour's projected 24.

PHOTO CAPTION

Under the watchful eye of his security, Palestinian President Yasser Arafat speaks to reporters after his meeting with Russian envoy to the Middle East, Andre Vedoven, at Arafat's headquarters in Ramallah January 11, 2003. (Osama Silw