JERUSALEM, NOV 2: Israel and the Palestinians said on Thursday they had agreed on steps to end their bloodiest clashes in years.Israeli Prime Minister Ehud Barak's office issued a dramatic pre-dawn announcement saying former prime minister Shimon Peres and Palestinian President Yasser Arafat had clinched an accord during a late-night, two-hour meeting in Gaza City.Palestinian and Israeli officials said Barak and Arafat would issue public appeals for calm at 2.00 pm (1200 GMT)."The two leaders will call on the forces and their own sides - anyone in the field - to stop, cease fire and reduce the violence, return home and stop the incitement," Gilead Sher, head of Barak's office, told Israeli Army Radio.A statement read on Palestinian radio and television by Palestinian Information Minister Yasser Abed Rabbo called on Palestinians to protest only peacefully in their struggle with Israel for an independent state."The Palestinian leadership calls on our people.just to demonstrate within the context of popular demonstrations and stick to peaceful means in.its just struggle to obtain our firm, national and legitimate rights," Abed Rabbo said.Four hours before the joint announcement was due, Palestinian hospital officials said Israeli troops had shot dead a Palestinian teenager during a stone-throwing protest in the West Bank village of Hizma.Another Palestinian died of a gunshot wound in the Gaza Strip, hospital officials said, raising to 165 the number of people killed in five weeks of Israeli-Palestinian violence. Almost all of the dead have been Palestinians.Israel's army spokesman, Brigadier-General Ron Kitrey, said troops had received orders to withdraw tanks and lift closures on Palestinian cities."The appropriate orders have been given - not only not toshoot.but also to withdraw the heavy armour and lift the closures around Palestinian communities," he told Army Radio.The army said Israeli and Palestinian commanders were already meeting in the West Bank.Witnesses said Israel had withdrawn tanks from positions at the flashpoint Karni crossing between Israel and the Gaza Strip and from the entrance to the West Bank town of Ramallah.Journalists at another Gaza troublespot, the Netzarim Junction, said Palestinian police tried to stop young protesters from throwing stones at an Israeli army outpost and had loaded many of the youths onto trucks to take them from the area.Meanwhile, the United States, the main Middle East peace broker, said it had been informed of the understanding by both sides."It's a welcome development and we'll be looking for full compliance by both sides," White House National Security Council spokesman P J Crowley said.Hours earlier, Israel's cabinet drew up a battle plan to crack down on the Palestinians after three of its soldiers died in gunfights on Wednesday. It was the country's heaviest one-day casualty toll of the unrest.Six Palestinians were also killed in Wednesday's battles."There were some Palestinian quality targets that were picked and selected but of course all of this was put in the drawer because we have a better option now, a better chance," Kitrey told Reuters.Unlike in past truce agreements, Israel said Arafat himself would address Palestinians to call for an end to hostilities, an action Israel had said would be necessary to stop the bloodshed."It is a cessation of violence," said Peres, the regional cooperation minister in Barak's government, explaining the understandings with the Palestinian leader. "We want at least two days without funerals."A senior Palestinian official said a commission of inquiry into the violence would be arranged with the United States within two days as well as arrangements to resume peace talks.