Israeli Prime Minister Benjamin Netanyahu said Wednesday he might turn down an invitation by President Clinton for Middle East talks in Washington next week if going meant bowing to U.S. ultimatums.

Rejecting the American bid could drive a wedge between Israel and its most important ally, analysts said.U.S. Secretary of State Madeleine Albright issued the invitation after two days of separate talks in London with Netanyahu and Palestinian President Yasser Arafat that failed to lift peacemaking out of a 14-month slump.

She said Clinton was prepared to host the two sides for long-delayed talks on a final peace accord but only if interim issues were resolved in advance - a reference to a U.S. proposal that Israel hand over another 13 percent of West Bank land to Palestinian rule.

Netanyahu, asked if rejecting an invitation from such a crucial ally was even an option, told Israel's Army Radio:

"Possibly. Am I obligated to accept every invitation on any condition?

"I am ready to go, that's not the problem. But if they tell me I have to go and accept certain conditions that are unacceptable to us - we are a sovereign country."

Netanyahu said the two sides had made progress in the London talks, which ended on Tuesday, but security concerns barred Israel from ceding large parts of the West Bank, which Israel captured in the 1967 Middle East war.

Underscoring tensions at friction points between Arabs and Jews, a Jewish seminary student was stabbed to death in Jerusalem's Old City on Wednesday as he made his way to the Wailing Wall for morning prayer.

Jerusalem police commander Yair Yitzhaki said authorities were almost certain the killing was politically motivated.

Jerusalem Mayor Ehud Olmert, a member of Netanyahu's right-wing Likud party, said the student was most likely murdered "by Arab terrorists."

In the West Bank, a Jewish settler shot dead a Palestinian who attacked him with a knife, settlers and Israel Radio said. The Palestinian stopped the Israeli's car and stabbed him several times before being shot.

Muslim militants opposed to Israeli-Palestinian peace deals have killed scores of Israelis in suicide bombings and other attacks.

A leader of the Palestinian militant Hamas group in Gaza said after the stabbing that only guerrilla tactics would convince Israel to leave the West Bank and Gaza.