Gunman killed at Bethlehem church

BETHLEHEM, West Bank (CNN) -- Israeli soldiers shot and killed a gunman who emerged from the Church of the Nativity in Bethlehem on Saturday morning, Israeli military sources said.

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The soldiers felt they were in danger from the gunman, who was evacuated to a hospital where he died of his wounds, the sources said.

Israeli soldiers began the siege of the church one month ago when Palestinians, who Israel says are terrorists, entered the building during Israeli incursions into Bethlehem.

Both sides say negotiations are taking place to end the siege but they differ on how the talks are progressing.

Israel says up to 200 Palestinians remain in the church, as many as 40 of them "senior terrorists" wanted by the Jewish state. The standoff began a month ago when the Palestinians went into the church as Israeli tanks and troops rolled into Bethlehem.

Israeli officials have said Palestinians inside the church who are not wanted on terrorism charges can leave at any time.

They have offered to try the alleged terrorists in Israeli courts or allow them to accept exile in a third country. So far, the Palestinians have rejected the proposals.

In a separate incident Saturday, an explosive device detonated about 300 meters from Manger Square in Bethlehem, blowing out the windows of a nearby building. No injuries were reported. (Mideast latest)

Manger Square is near to the Church of the Nativity, where Palestinian gunman have been holed up for about a month.

Israel soldiers are searching the building and a bomb disposal team is on the way to check the area.

One Israeli soldier told CNN's Walter Rodgers that the mysterious explosion was "a TNT laboratory" implying that Palestinians had accidentally detonated their own bomb in a bomb-making factory.

Rodgers added Palestinian sources say negotiations to end the Bethlehem church standoff were going ahead "at the highest level."

He said a senior Palestinian sources said he expected a resolution "in a matter of a day or so, not much longer."

Israeli officials confirmed the negotiations but were less optimistic about a timeframe for ending the standoff, Rodgers said.

Israeli spokesman Col. Olivier Rafovicz said he hopes the Palestinians have "the wisdom and rationality to bring this to a peaceful conclusion."