CNN Correspondents Richard Blystone, Ben Wedeman and Brent Sadler contributed to this report.
As the leaders met for eight hours Saturday trying to formulate a unified response to the violence, fresh clashes on the West Bank and in Gaza claimed four lives.
Observers expect the two-day summit to conclude with a call for a halt to the normalization of ties between Arab states and Israel, for a collection of funds to support the Palestinians, and for a war crimes tribunal.
But he accused Israel of massacring Palestinians, and he repeated his desire for an independent Palestinian state. "Our aim," Arafat said, "is to liberate our land, and to create our independent state on Palestinian blessed land with Jerusalem as its capital. And the return of our refugees to their homes."
Saturday clashes add to death toll
Palestinian hospital sources said a Palestinian was killed in Hebron, but the Israeli Defense Forces denied responsibility for that death. The IDF said the victim was killed by live ammunition and that Israeli forces had not used live ammunition in Hebron on Saturday.
A Palestinian man was killed near Jenin. Palestinian hospital sources said that based on the type of bullet that killed him, they believed he had been shot in the back by Jewish settlers.
A Palestinian teen-ager was killed, and more than 100 other people were injured in fighting in Gaza.
In Ramallah, a funeral for a Palestinian killed earlier escalated into a fire fight with Israeli forces. One Palestinian died of wounds sustained in the fighting.
A funeral for four Palestinians killed Friday passed relatively peacefully in Nablus. During the funeral, demonstrators cried for leaders at the Arab summit to take the strongest possible measures against Israel.
Libyan delegate walks out
The lead Libyan delegate to the emergency summit, Abdul Menaim al-Hawni, walked out of the meeting Saturday and issued a statement condemning Arab leaders for not severing all ties with Israel.
"The summit does not include a clear condemnation of Israel or at least propose the cutting of diplomatic relations, which is the minimum that could be done at such a focal point," the statement said. "While our Palestinian brothers are dying every day and our public opinion is still enraged by Israel's activities, the Arab leadership is passive and quiet."
Notably absent from the summit is Libyan leader Col. Moammar Gadhaffi, who recently said he has scant confidence in the summit's outcome..
Assad: 'Israel is after war'
Saturday's fighting and funerals came a day after Israeli Prime Minister Ehud Barak said his country would wait to see what comes out of the summit. He said Israel will monitor the crisis, reassess its position and, if necessary, call for a "time out" in the peace process.
Street demonstrations through the Arab world in recent days have called for stronger measures against Israel, including war. But at the summit only Iraq went on record with a call for a Jihad, or a holy war -- although Syria's new President Bashar Assad also took a tone that worried some Israelis.
"While we are after peace, Israel is after war," said Assad, who is attending his first Arab League summit. He called for a wide-ranging Arab boycott.
"I must say (Assad) used very extreme language," Israeli parliament member Dan Meridor told CNN. "Extreme language will not lead anywhere ... We need an agreement, he needs an agreement, we need to talk, not to create this dramatic destabilization of the area."
Arab foreign ministers have said the summit will not result in a declaration of war against Israel. And Arab officials said there are no plans at the summit to use oil exports as a political weapon.
Egypt and Jordan, the two Arab nations that have peace treaties with Israel, have also indicated they will veto any resolution that would call for a suspension of their ties with Israel or a boycott of Israeli goods and companies dealing with Israel.
But Egyptian President Hosni Mubarak, in opening the summit, said Israel had assumed "a belligerent attitude whose grave consequences we caution against. It is an attitude which threatens the very essence of peace."
Nine killed Friday
At least nine Palestinians were killed in violence on Friday. The fighting has continued virtually unabated since September 28, when Israeli opposition Likud party leader Ariel Sharon visited a Jerusalem shrine holy to both Muslims and Jews.
Friday's fighting broke out during the passage of a 48-hour so-called "cooling-off" period, agreed upon by Israel and Palestinians at an emergency summit Monday in Sharm el-Sheikh, Egypt.
Palestinian Cabinet minister Ziab Abu Ziab told CNN on Saturday that if Israeli forces withdraw from the occupied territories and Israel promises to live with the Palestinians as "good neighbors, then things will change 180 degrees."
EU and U.N. react
In Paris, France, the European Union on Saturday appealed to Israelis and Palestinians to work harder to make peace and to end the fighting that has left 120 people dead, mostly Palestinians.
"The European Union again appeals for an immediate halt to violence in the Palestinian territories," the 15-nation bloc said in a statement.
Meanwhile, the United Nations issued its third recent criticism of Israel on Friday, when the General Assembly voted 92-6 to condemn what it called the "excessive use of force" by Israeli troops.
The United States, Israel and four other countries voted against the nonbinding resolution. Forty-six nations voted to abstain, while 30 countries did not cast a ballot at all.
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