Service chief Yuval Diskin told ministers at Sunday’s meeting of the Israeli Cabinet that there had been “a steady trickle into Gaza of foreigners linked to global jihad,” according to an official present at the closed-door meeting.

Diskin did not elaborate or cite evidence.

Gaza’s Hamas interior minister Fathi Hamad dismissed Diskin’s charge as “baseless propaganda.” The militant group Hamas controls the West Bank.

He added that “there is no al-Qaida or any other organization in Gaza.”

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

JERUSALEM (AP) — Israel on Sunday rejected a U.S. demand to suspend a planned housing project in east Jerusalem, threatening to further complicate an unusually tense standoff with its strongest ally over settlement construction.

Israeli officials said the country’s ambassador to Washington, Michael Oren, was summoned to the State Department over the weekend and told that a project being developed by an American millionaire in the disputed section of the holy city should not go ahead.

Settlements built on captured lands claimed by the Palestinians have emerged as a major sticking point in relations between Israel and the Obama administration because of their potential to disrupt Mideast peacemaking.

Although Prime Minister Benjamin Netanyahu recently yielded to heavy U.S. pressure to endorse the establishment of a Palestinian state, he has resisted American demands for an immediate freeze on settlement expansion.

On Sunday, Netanyahu told his Cabinet there would be no limits on Jewish construction anywhere in “unified Jerusalem.”

“We cannot accept the fact that Jews wouldn’t be entitled to live and buy anywhere in Jerusalem,” Netanyahu declared, calling Israeli sovereignty over the entire city “indisputable.”

“I can only imagine what would happen if someone suggested Jews could not live in certain neighborhoods in New York, London, Paris or Rome. There would certainly be a major international outcry,” Netanyahu said.

The international community considers Jewish neighborhoods in east Jerusalem to be settlements and an obstacle to Israeli-Palestinian peacemaking because they complicate a possible division of the city between Israelis and Palestinians. Israel does not regard them as settlements because it annexed east Jerusalem in 1967 after capturing it in June of that year.

East Jerusalem is an especially volatile issue because it is the site of key Jewish, Christian and Muslim holy sites. The Palestinians want the traditionally Arab sector of the city to be the capital of their future state.

The head of Israel’s Shin Bet internal security service, Yuval Diskin, told ministers at Sunday’s meeting of the Israeli Cabinet that both the Western-backed administration of Palestinian President Mahmoud Abbas and the militant Islamic Hamas were carrying out “covert activity” in east Jerusalem to stop Jews acquiring property there.

An official present at the meeting, speaking on condition of anonymity in line with Cabinet rules, did not elaborate on what the activity entailed but quoted Diskin as saying that hardline Egyptian cleric Sheik Youssef al-Qaradawi had earmarked $25 million to be funneled to Hamas activists in Jerusalem. Al-Qaradawi is a well-known figure in the Arab world and a regular on the satellite Al-Jazeera network.

The official said Diskin told the Cabinet that the money was to be used by Hamas to buy apartments and plots of land and “build charitable institutions to broaden its base in the city.”

He did not provide evidence.

Palestinian negotiator Saeb Erekat said Jewish expansion in east Jerusalem jeopardizes peace efforts.

“If the Israeli prime minister continues with settlement activities, he will undermine the efforts to revive the peace process,” he said.

According to Army Radio, the U.S. has demanded that planning approval for the project be revoked.

The approval, granted by the Jerusalem municipality earlier this month, allows for the construction of 20 apartments plus a three-level underground parking lot.

A spokesman for the U.S. Embassy had no immediate comment.

The Palestinians have been encouraged by Washington’s insistence that Israel freeze all settlement construction on captured lands in east Jerusalem and the West Bank. Nearly 300,000 Israelis live in West Bank settlements, in addition to about 180,000 Israelis living in Jewish neighborhoods in east Jerusalem.

The Palestinians say the Israeli presence makes it increasingly difficult to establish an independent state in these areas. They have refused to restart peace talks until Israel halts all settlement expansion, something the Israeli government has refused to do.

The east Jerusalem project is being developed by Irving Moskowitz, an influential supporter of Israeli settlement in east Jerusalem who purchased the Shepherd Hotel in 1985 and plans to tear it down and build apartments in its place.

The Jerusalem municipality issued a statement saying the purchase was legal.

The pope celebrates mass with his broken wrist in plaster.

He held the text of his speech in his uninjured left hand, then circulated among the crowd who came to hear him in Romano Canavese, pictures from the northern Italian town showed.

The 82-year-old pope had surgery on his right wrist after he fell Thursday night, spokesman Father Federico Lombardi told CNN on Friday.

The pope is “learning” to live with his cast, Lombardi told Vatican Radio.

The most painful aspect of the incident for Benedict is having to give up writing by hand, which he had intended to do frequently during his annual vacation Italy’s Val d’Aosta region, Lombardi told the official Vatican station.

“I know that here, too, in the Ivera region, many families are facing economic hard times due to a lack of work,” he said, referring to the now-defunct Olivetti typewriter manufacturer in the region.

“Dear friend, do not be discouraged,” he added, according to Agence-France Presse.

“Providence always helps those who do the right thing and seek justice; it also helps those who think not only of themselves, but also think of those in worse situations than their own.”

Police shot and killed 12 “mobsters” during disturbances in the regional capital Urumqi on July 5, Xinhua news agency said in a report issued early Sunday that quoted the head of the Xinjiang regional government, Nur Bekri.

Some of Xinjiang’s Uighur minority, a mainly Muslim, central Asian people, went on the rampage on July 5, assaulting members of China’s dominant Han ethnic group in attacks that left at least 192 dead.

Uighurs say police sparked the rioting by shooting peaceful protesters who were demanding an investigation into a recent factory brawl in southern China that left at least two Uighur migrant workers dead.

However, Nur Bekri said police opened fire to prevent further bloodshed, according to Xinhua.

“The police showed as much restraint as possible during the unrest,” he said, adding they had initially fired shots into the air but that had failed to disperse “extremely vicious” thugs.

Three of those shot died on the spot, with nine others dying after medical treatment failed, he said.

The report gave no details of the ethnicity of the deceased or those involved in the unrest, but authorities have already pinned the blame for the unrest on Uighurs, many of whom complain of decades of Chinese repression.

Thousands of Han Chinese armed themselves with clubs and other weapons and marched through Urumqi seeking vengeance on Uighurs in the days after the riots, but were mostly thwarted by a huge security force.

Xinhua also issued a report Sunday that it said supported the government’s official line that the unrest was planned in advance.

Citing unnamed witnesses in Urumqi, it said rioters instigated violent acts in more than 50 locations throughout Urumqi, suggesting that weapons were stockpiled ahead of time.

“Knives became hot-selling products two or three days before the unrest,” it said, citing local businesses.

It also said stones that were hurled at targets or used to bludgeon victims appeared to have been trucked into the city in large numbers beforehand and that rioters appeared to have knowledge of how to quickly ignite the fuel tanks of buses and other vehicles.

The report did not say who might have planned the attacks.

However, China has already said they were orchestrated by exiled US-based Uighur activist Rebiya Kadeer, who has denied the accusation.

The Xinhua reports made no mention of ethnic violence and said the unrest had initially started as a “student parade”.

In the wake of the disturbances, Chinese troops and police imposed heavy security on parts of Urumqi, particularly neighbourhoods with large Uighur populations.

The U.S. Defense Department said in a statement that Bergdahl was a member of the 1st Battalion, 501st Parachute Infantry Regiment, 4th Brigade Combat Team, 25th Infantry Division, Fort Richardson, Alaska.

His status was changed two weeks ago from “whereabouts unknown” to “missing-captured.”

Luxury hotels like those attacked yesterday in Jakarta — the JW Marriott Hotel and the Ritz Carlton — face a tough balancing act, said Philip Farina, who runs a hotel security company in San Antonio.

Wealthy and important guests seek easy access to amenities even as their presence may “invite attention from terrorists looking to heighten the impact of their actions,” Farina said. Burdensome security measures risk driving away guests “if they make a hotel feel like a military camp.”

“We will see more attacks” targeting hotels, Farina said.

While airports and government or corporate office buildings have tightened security this decade, hotels struggle to closely inspect people walking through their doors while trying to offer an open environment and customer service, he said.

The likely suspect in the attacks is Jemaah Islamiyah, a Southeast Asian Islamic militant group that bombed Jakarta’s Marriott in 2003 and has attacked other tourist sites, said Rohan Gunaratna, a terrorism analyst at Singapore’s Nanyang Technological University. No one has claimed responsibility.

Jemaah Islamiyah’s spiritual leader, Abu Bakar Bashir, called for renewed jihad against the West in a video posted on the Internet July 14, said Stratfor, an Austin, Texas-based consulting firm that monitors terrorist incidents.

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Marriott International Inc., the biggest U.S. hotel chain and based in the Washington suburb of Bethesda, Maryland, owns both chains involved in yesterday’s bombings.

Shares of Marriott International fell 2.4 percent to $19.96 in New York Stock Exchange composite trading at 2:06 p.m. today. The stock retreated 6.2 percent yesterday, the most in two months, after the company cut its forecast for 2009 profit.

“Our hotels are public places and are open to everybody,” said Marriott spokeswoman Laurie Goldstein in a telephone interview. “In places like Jakarta, we have extensive security, including armed security personnel, checkpoints in front of the hotel, fortified glass and steel and magnetometers in the lobby. We work with outside security firms. We still try to create a welcoming atmosphere inside the hotel but in order to get in, you need to go through these security measures.”

In practice, some hotels don’t always carry out security measures with diligence.

Metal Detector?

Security guards at Jakarta’s Grand Hyatt Hotel last week waved a Bloomberg reporter through the entrance without a search even after he set off a metal detector. A guard at the Taj Bengal hotel in Kolkata, India, this week refused a Bloomberg reporter’s offer to open his bag for a search, saying “No, sir, you are our guest, there is no need to disturb you.”

The Jakarta Grand Hyatt escalated its security measures after yesterday’s attack, while saying it is operating “as usual,” said Erika Anggreini, the hotel’s marketing and communications manager, in a phone interview. Jyoti Mishra, a duty manager at the Taj Bengal, said today the failure to search the bag was “an aberration.”

“I do not feel very safe,” said Johan Van der Velde, a Dutch vacationer staying at Mumbai’s Trident. “I was not checked when I came in last night, probably because I am not Indian.”

King David

Hotels aren’t new targets for extremists. In 1946, the Irgun, a violent wing of the Jewish pro-independence movement, bombed Jerusalem’s King David Hotel, killing British bureaucrats and army officers who then governed Palestine under a United Nations mandate.

Islamic militants have killed about 164 people over the past 19 months in a half-dozen attacks on luxury hotels in the region of the U.S.-led war against the Taliban and al-Qaeda in Afghanistan and Pakistan. Targets included the Serena Hotel in the Afghan capital, Kabul; the Marriott in Pakistan’s capital, Islamabad; three hotels in Mumbai; and the Pearl Continental in the Pakistani city of Peshawar.

Pakistan-based gunmen who in November besieged Mumbai’s Taj Mahal Palace & Tower, Trident and Oberoi hotels revived tensions between Pakistan and India and jolted India’s business community. Ashok Kapur, chairman of Mumbai-based YES Bank Ltd., was among the dead.

The Marriott bombing yesterday killed Timothy David Mackay, who ran the Indonesian unit of Jona, Switzerland-based Holcim Ltd., the world’s second-biggest cement maker. Among those injured were employees of Freeport-McMoRan Copper & Gold Inc., the world’s biggest publicly traded copper producer, based in Phoenix.

While security typically is tightened immediately after a major hotel attack, it eventually slackens, said Marcus Mietzner, an Indonesian-studies lecturer at Australian National University in Canberra.

Hotel staff “say ‘Why are we doing this, it just delays people coming into the hotel,’” Mietzner said. “If you want to smuggle in something it’s certainly possible. They do check bags but they do not check if you walk through and the metal detector beeps.”

The world’s No. 1 player missed the cut Friday at the British Open, shooting a 4-over 74 at Turnberry that had him headed back home to Florida on the same day that 59-year-old Tom Watson tied for the 36-hole lead.

“Well, obviously it’s disappointing, there’s no doubt,” said Woods, whose total of 5-over 145 missed the cut by a stroke. “I was playing well coming in, and today unfortunately I just didn’t play certain holes well. I was playing the first seven holes dead into the wind. I was playing those holes well, I was 1-under par and just right there. And then unfortunately three holes right in a row and I was 4-over par.”

It is the first time Woods has missed a cut since the 2006 U.S. Open at Winged Foot, where he was playing for the first time since the death of his father, Earl, in May of that year.

Depending on how you view the numbers, it was either the fifth or sixth missed cut of Woods’ PGA Tour career.

His only true missed cuts before Friday came at the 1997 Canadian Open, the 2005 Byron Nelson Championship, the 2005 Funai Championship and the 2006 U.S. Open.

Woods holds the PGA Tour record of 142 consecutive cuts made from the 1998 Buick Invitational until the 2005 Nelson. That streak began after the ’98 AT&T Pebble Beach National Pro-Am, where he withdrew when the final round of the event had to be rescheduled for six months later due to weather. While he technically did not miss the cut, the WD is a gray area.

None of that was of any concern to Woods on Friday after he made two double bogeys on the back nine at Turnberry.

Woods began the day seven strokes out of the lead and did not tee off until after 2 p.m. local time, when the tournament lead of 5 under had been established by Steve Marino. A birdie at the seventh hole got Woods to even par for the tournament, and with players dropping back in poor conditions, Woods seemed to be marking his time.

But Woods followed with bogeys at the ninth and 10th holes, a double at the 10th, a bogey at the 12th and another double at the 13th. He played a six-hole stretch in 7 over par, a first for Woods as a pro. Birdies at the 16th and 17th holes were too little, too late.

This will be the first time in two years — a span of 19 official stroke-play events — that Woods will not finish among the top 10 on the PGA Tour. The last time he failed to do so was at the 2007 British Open at Carnoustie. During that stretch, Woods has 10 stroke-play victories and two majors.

“That is surprising,” said Watson, a five-time Open champion, who shot 70 and is tied for the lead with first-time Open participant Steve Marino. “It seems like [Tiger's] been playing awfully well this year.

“Links golf … I’ve played it when I’m not playing very well, and it’s a struggle. You add a little wind to it like we had today and it’s more of a struggle. How do you get the ball in play? And when you’re not very confident about where you’re hitting it and you start hitting it sideways a few times, then it gets to you.

“I don’t care how good you are, it gets to you.”

There was little indication, however, that Woods would flounder like this. Since returning from knee surgery in February, he had played nine tournaments, winning three of them and finishing among the top 10 in all eight stroke-play events.

After winning the Memorial Tournament in early June, Woods tied for sixth at the U.S. Open, missing a playoff by four strokes. He then won his own AT&T National two weeks ago.

Although Woods had never seen Turnberry before this week, he figured to handle it the way he did Hoylake in 2006 — by wearing out the fairways with long irons and fairway woods.

Yet Woods managed to hit just 15 of 28 fairways and 21 of 36 greens in two days.

“I was playing well for the first seven holes,” Woods said. “I was hitting good shot after good shot. And from eight through probably 11 or 12, I was struggling there for a little bit. … You’ve got to play those holes either even par, 1-over par, sometimes under par, and I went the other way. I had some high numbers and it cost me a chance on the weekend.”

Jeff Kepner held hands with his wife Thursday as he talked to news reporters about his recovery at the University of Pittsburgh Medical Center where he underwent the nine-hour surgery in early May.

So far, he has no feelings in his new hands because the nerves have not grown into them. Nerves grow about an inch a month, according to his doctors.

Kepner said he does daily therapy to develop muscle strength to use his hands, and he hoped to inspire others who need such surgery to consider it. He lost his hands and feet a decade ago to a bacterial infection, and said he did not want to undergo the surgery at first.

“I thought, ‘Are you kidding me?’ I said, ‘There’s no way I’m going to do that,’” Kepner recalled telling his wife when she told him about the possibility last fall.

Showing off his hands Thursday, Kepner said he’s glad he went through the surgery. He had been ambivalent because he could manage with his prosthetics and had read that the world’s first double hand transplant patient had to have the hands removed because his body rejected them.

But Valarie Kepner was persistent. She had contacted UPMC without telling her husband. She wanted him to be able to regain some of his independence after being on her schedule for years. She gets up for work at 4:30 a.m., and that meant he had to as well.

Eventually, Kepner met with Dr. W.P. Andrew Lee, the hospital’s chief of plastic surgery, who helped put his mind at ease.

Lee said that for the May 4 surgery, 21 surgeons worked in teams of four: two prepared Kepner’s forearms and two prepared the donor’s hands. The teams worked simultaneously.

UPMC developed a protocol to reduce the amount of toxic anti-rejection medications that must be taken so that the hands are not rejected, Lee said. The medications can increase the risk for diabetes, infections and other complications.

While Kepner shows no sign of rejection and is making steady progress, it could be a year or two until he gains full movement of his fingers, Lee said. Kepner could be at the hospital another couple months.

Demonstrating some exercises, Kepner struggled a bit because the muscles in his fingers are tight. He tried passing a small ball between his hands and used his right hand to unstack a set of small cones and build another stack.

Kepner said he looks forward to being able to shower and cook, explaining he became a pastry chef after retiring from the Air Force.

“I want to try these hands out. I want to put them to use,” he said. “It will really free me up and free her (Valarie) up. The independence will be nice, to get that back. And the touch and the feel. That’s the big part for me.”

Eight double hand transplants have been performed abroad. UPMC performed its first hand transplant in March on a Marine who lost his hand in a training accident. Lee said that patient is recovering well and can do crossword puzzles.

”It’s time for health care reform,” implores a woman in the ad, who is struggling with health care bills because of her son’s cerebral palsy and epilepsy.

The 30-second spots running in eight states represented by moderates take a relatively gentle approach. However, some of the Democratic Senators who are the targets of the message publicly profess to be puzzled at the tactic. “When the president has a health care plan, I’ll be happy to support it, but he doesn’t have one right now,” Senator Mary Landrieu of Louisiana told reporters.

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Senator Kent Conrad, chairman of the Senate Budget Committee, expressed only sarcastic bemusement about the DNC ad being run in North Dakota targeting him. “You gotta love it!” he chuckled in an interview with ABC News. “Is this a great world that we live in?”

Despite their nonchalance, Democratic moderates are indeed worried about the White House move. The implied message is: We’re watching you and the next round of ads won’t be so gentle and kind if you don’t get behind the Obama program.