Palestinians are commemorating the 60th anniversary of Israel's founding, which they call the Nakba, or "catastrophe".

The day remembers the 700,000 Palestinians who fled or were forced to leave their homes in the fighting around Israel's creation in 1948.

Speaking in Ramallah, Palestinian President Mahmoud Abbas said: "There are two peoples living on this beloved land - one celebrates independence and the other feels pain of the memory of its Nakba.

"It's time to end the Nakba of the Palestinian people."

US President George Bush is on a three-day visit to the region to celebrate Israel's founding, during which he will make a speech at Israel's parliament.

According to an advance text, Mr Bush will hail the US ally as "a thriving democracy in the heart of the Holy Land" while making fleeting mention of Palestinian hopes for statehood.

There is no repetition of his oft-spoken hope of sealing an Israeli-Palestinian peace deal before he leaves the White House in January.

Instead, Mr Bush spells out a vision of the Middle East in 60 years, predicting Israel will celebrate its 120th anniversary "as one of the world's great democracies" and the Palestinians "will have the homeland they have long dreamed of and deserved".

Asked about the speech, White House spokeswoman Dana Perino said "nothing has changed" and the president remained "hopeful" a deal can be struck by the time he leaves office.

Violence around the Hamas-controlled Gaza Strip still hampers peace efforts. A rocket fired from the territory hit a shopping mall in the southern Israeli city of Ashkelon, wounding several people, on Wednesday.

An Israeli air strike later killed two Hamas fighters.

In the Gaza Strip, Hamas has urged Palestinians to march on the border and "break the siege" - an Israeli-led embargo that has been stepped up since the Islamists routed Mr Abbas's forces in the enclave last June.

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