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Three Israelis were killed and some 40 sustained injuries yesterday in a suicide bombing at the Carmel market in Tel Aviv, which was carried out by a 16-year-old boy from the Askar refugee camp near Nablus.

Reacting to the attack, Prime Minister Ariel Sharon said it was a clear signal that there was no change in the Palestinian Authority.

The three victims of the attack were identified as Shmuel Levy, 65, of Jaffa; Tatiana Ackerman, 32, of Tel Aviv and Leah Levine, 67, of Givatayim.

Eight of the injured were in hospital last night in serious to critical condition. Another 12 injured also remained in hospital -two in moderate condition, and the rest with light injuries.

The terror attack was carried out by Amar al-Far, one of the youngest suicide bombers ever. Apparently the device he was carrying was not very large, but was filled with metal fragments.

Sharon told his Likud faction in the Knesset that Israel would continue its "war against the murderous terror" and that the government would "not be satisfied with talk, promises and condemnations." (see story, Page 2).

Major General David Tsur, Tel Aviv District police chief, who visited the scene of the attack yesterday, noted that the police had not received any warnings regarding an attack in the market. There was no way of hermetically sealing off a place like the Carmel market, he said

Samira Abdullah, 45, al-Far's mother, said the people who had sent her son to Tel Aviv were wrong to exploit someone too young to understand the implications of his act. "It's immoral to send someone so young," she said. "They should have sent an adult who understands the meaning of his deeds."

Speaking to Haaretz last night, the bomber's father said: "God will curse those who recruited Amar. I had heard the stories about recruiting children in Nablus but I didn't think they were true... Yes, it is difficult here for everyone because of the occupation, and life in Nablus is intolerable, but children should not be exploited in this way."

Prime Minister Ariel Sharon and Defense Minister Shaul Mofaz did not hold special consultations after the attack; Sharon said that Israel will not respond directly to the suicide bombing, but will continue its ongoing war against the terrorist groups.

"Until concrete steps are taken to eradicate the terror and disarm the terror organizations, to implement reforms and stop the incitement, Israel will continue its policy," Sharon told a Likud faction meeting.

The Popular Front for the Liberation of Palestine's Mustafa Ali Brigades claimed responsibility for the attack. Security sources said the bomber arrived with the explosives on Sunday night in Abu Dis, the East Jerusalem suburb, and the plan was to carry out the attack in the capital. But a heavy police presence in response to an alert about a terrorist heading to Jerusalem made the bomber and his driver decide to go to Tel Aviv.

Security forces upgraded their security alert in the Dan region, searching for accomplices, and arresting two suspects right after the bombing.

"I saw lots of people lying on the ground, lots of people wounded," said shopper Michal Weizman. "There was a woman whose entire body was torn up, all her body was torn up." Paramedics treated dazed and wounded shoppers on the ground, amid vegetables strewn across the pavement. Police searched waste bins for additional explosives. But within hours, shopping was back to normal in the market.

Yesterday's bombing was the first suicide attack in Israel since September 22, when a Palestinian woman bomber blew herself up at the French Hill intersection in Jerusalem, killing two border policemen.