BETHLEHEM (West Bank), April 3: Israeli forces laid siege to Bethlehem’s Church of the Nativity on Wednesday, seeking to arrest, as they put it, dozens of Palestinians who had fired on them from one of Christianity’s holiest sites.

The siege added an alarming twist to the Israeli army’s ferocious campaign to crush Palestinian resistance as Arab rage hit the streets aimed at Israel’s main backer, the United States.

Egypt announced suspension of all political contacts with the Jewish state and hinted it could cut back diplomatic ties too.

Information Minister Safwat el-Sherif said Cairo would cut off “all contacts with the Israeli government except for diplomatic channels which serve the Palestinian cause”.

The announcement appeared to be largely symbolic, with anger high in the Egyptian streets over the Israeli crackdown on Arafat. An Israeli embassy spokesman said there had been no formal warning.

Russia, Spain, France and Switzerland called in Israeli ambassadors to express concern over the stepped-up offensive in the West Bank.

The Israeli assault, in its sixth day on Wednesday, sent world leaders scrambling to keep a lid on the crisis. The UN Security Council, the Arab League and the European Union were all holding urgent talks.

Five more people were killed in this West Bank town, bringing the toll to 10 since the Israelis rumbled in on Tuesday with tanks and armoured vehicles and proclaimed the biblical city a “closed military zone”.

With the Israelis deployed on Manger Square opposite the church and restricting movements within the city, hospital officials and relief workers feared other bodies could be laying unclaimed on the streets.

The standoff here came as troops of the Jewish state moved to expand their hold on the West Bank, moving into the towns of Jenin, where five

people died in fighting, and Salfit.

The seizures brought to seven the number of West Bank towns taken since Israel launched a massive operation on Friday to “isolate” Palestinian leader Yasser Arafat in his headquarters in Ramallah.

Only sporadic gunfire was heard in Ramallah, and the Israelis took control of the headquarters of Arafat’s security chief in the nearby town of Beitunya.

In Bethlehem, witnesses said between 300 and 400 people were holed up without food in the Church of the Nativity. They said most were civilians, including women and children, and half a dozen were wounded.

But Raanan Gissin, spokesman for Prime Minister Ariel Sharon, alleged “dozens of armed Palestinians, some of them implicated in terrorist activities, are hiding in the building and cynically exploiting a church.

“The Palestinians inside must surrender and come out with their hands up. We do not intend to kill them. Those involved in terrorist activities will be arrested and interrogated, and the others set free.”

Israeli army officials said they had given strict orders not to fire at any churches. But Palestinian security sources said a 39-year-old Palestinian was killed by Israeli sniper fire outside the church.

A man claiming to be the commander of the men inside the church, who refused to give his name or affiliation, said his men were under orders not to open fire or “to give the Israelis the pretext to do so”.

Michel Sabbah, the Latin patriarch of occupied Al Quds, said the Palestinians could claim sanctuary and had already laid down their arms. “In this case, we have an obligation to give refuge to Palestinians and Israelis alike.”

The Palestinians were pinned down by troops in Manger Square, where the Israelis seized the town hall building and arrested about 20 people.

In other incidents in the city on Wednesday, a 22-year-old man was killed in a shootout, and a 60-year-old policeman and a 25-year-old guerilla died of wounds suffered on Tuesday.

50 TANKS: Heavy clashes broke out as about 50 tanks made their way to the centre of Jenin, a town in the northernmost part of the West Bank from where several suicide bombers have attacked Israel.