Prime Minister Binyamin Netanyahu instructed authorities to transfer tax revenues for January to the Palestinian Authority and called on the Palestinians to restore calm to the area, Israel's Channel 10 said.
Veteran Israeli politician Binyamin (Fuad) Ben-Eliezer warned Israel is on the verge of a third intifada, which he said would be bloodier than previous uprisings. Ben-Eliezer told Israel Radio that Netanyahu must resume peace talks with the Palestinians before the situation worsens.
The area is headed toward escalating violence mainly because of the shaky economic situation in the Palestinian Authority, Giora Eiland, former national security adviser and army reservist general, told the radio.
Other factors leading to a possible escalation in violence include the Palestinian prisoner issue, price-tag attacks carried out by extremist settlers against Palestinians and "unnecessary statements" by Palestinian officials concerning West Bank settlement building, Eiland said.
Rajoub denied the Palestinians were seeking a third intifada and blamed extremists on both sides for instigating fear and death.
"We don't want Palestinians in the West Bank and east Jerusalem to drag the area into bloodshed. We want peace and the two-state solution," he told Israel Radio.
Abbas said Saturday that he favors a peaceful and popular resistance, The Jerusalem Post said. Abbas said he discussed the issue with Hamas leader Khaled Mashaal in Cairo and they reached an agreement on the need for a peaceful intifada.