A letter-bomb exploded in the offices of Fatah, the mainstream Palestine Liberation Organization faction, in the Algerian capital, killing two guerrillas and wounding two others, PLO sources said Friday.

The explosion at 3 p.m. Thursday badly damaged the offices and shattered windows in the downtown building, sources speaking from Algiers and Tunis said.An Arab diplomatic source said the victims were members of the elite "Group 17," charged with protecting PLO chairman Yasser Arafat and other PLO officials.

However, the PLO sources denied this, saying the victims were not personal bodyguards to Arafat. The PLO sources said Arafat does not frequent the building when he is in Algiers. Arafat was reportedly in Tunis at the time of the blast.