AP Diplomatic WriterJERUSALEM (AP) -- His peacekeeping mission rocked by a terrorist bombing, Secretary of State Colin Powell was reviewing whether to meet with Palestinian leader Yasser Arafat on Saturday, a U.S. official said.

Just hours after a suicide bomber struck near a Jerusalem marketplace Friday, the White House called on Arafat to publicly denounce the terrorist act and the State Department said Powell would decide later whether to see Arafat as planned.

"He's looking at the whole situation in terms of the bombing and where we stand and where we are," said State Department spokesman Richard Boucher.

White House spokesman Ari Fleischer, asked whether Powell was considering canceling, said President Bush had given the secretary flexibility necessary to his mission. "Today would be a very good day for Yasser Arafat to publicly denounce terrorism and show some statesmanship," Fleischer said.

Powell heard about the bombing as he prepared to board a helicopter to tour Israel's fragile northern border area. Israeli Defense Minister Benyamin Ben-Eliezer provided Powell more details and the helicopter passed over the site of the attack.

Earlier in the day, Powell failed to get Israeli Prime Minister Ariel Sharon to agree on a timetable for withdrawing Israeli troops from Palestinian cities and towns.

Not long after the Powell-Sharon meeting, an explosion triggered by a suicide bomber went off near Jerusalem's outdoor market, killing at least six people and injuring 84.

Powell expressed regrets to Sharon and condemned the terrorist act, saying it illustrates the dangerous situation and the need for Israel and the Palestinians to find a solution to stop the spiraling violence.

Earlier in the day, after Powell and Sharon had talked for four hours, the secretary said: "I hope we can find a way to come to agreement on this point of the duration of the operations and get back to a track that will lead to a political settlement because that is uppermost in everyone's mind."

Sharon, for his part, gave no commitment on when the military operation would end.

"Israel is conducting a war against the Palestinian infrastructure of terror and hopes to end it as soon as possible," Sharon said at a news conference with Powell.

President Bush condemned the bombing, Fleischer said. "There are people in the region who want to disrupt Secretary Powell's mission. The president will not be deterred from seeking peace."

Powell, looking to Saturday's scheduled meeting with Arafat, said: "What is important now is not just rhetoric going on into the air with no effect but action, action that will bring this violence under control, action that will give a feeling of hope to the people in the region and that will be my message to Chairman Arafat and we will see what his reaction is."

The Bush administration has enjoyed strong support in Congress, but Republican Sen. Kit Bond of Missouri said Friday that the White House should consider bringing Powell home and refuse to deal with Arafat.

"We shouldn't be trying to help bring a peace settlement when the atrocities continue to emanate from the Palestinian Authority," Bond said.

Powell's comments came after a separate meeting with Israeli Foreign Minister Shimon Peres, who said Israel has no interest in remaining in the Palestinian areas for any length of time. "We are talking about a week or something a little bit more than that," Peres said.

President Bush last week called on Israel to pull back "without delay." Initially supportive of Israel's counterterror tactics, the administration has accelerated its demands that Israel ease up.

Powell did say he and Sharon had a "mutual commitment" to bring the two sides to negotiations toward a peace settlement that would eventually lead to a Palestinian state.

"We recognize that eventually to reach the kind of solution that is needed, the parties must talk," Powell said, "the parties must begin negotiations."

He said Sharon had offered "a commitment to peace, a commitment to finding a way forward ... so that these two peoples can live together side by side."

In what appeared to be a gesture ahead of Powell's arrival, Israeli forces withdrew from about two dozen small towns and villages. However, they briefly moved into a new one: Kalil near the northern city of Nablus, where troops made arrests before leaving, the military said in a statement Friday. Military activity continued in a number of other cities, including Jenin, Nablus, Ramallah, Bethlehem, Dura and Dahariyah, south of Hebron.

Israel's army says 4,185 Palestinians have been detained since the operation began two weeks ago.

Sharon cast the military operation as a prudent response to terrorist attacks.

"The suicide bombers' terrorism represents a danger for Israel and the entire free world," he said. "Israel is the only democracy in the world in which there are guards in every school and in every kindergarten in order to protect the children against Palestinian terrorism."

Although Sharon offered no timetable for ending the two-week military thrust, Powell said the prime minister "is anxious to bring these operations to an end."

Powell said that while the United States recognizes the need of Israel to defend itself, "at the same time, as a friend of Israel, we have to take note of the long-term strategic consequences" of the violence.

Later Friday, Powell took a helicopter tour of the Lebanese border area, where Israeli warplanes have blasted suspected guerrilla hide-outs in southern Lebanon after Hezbollah fighters attacked Israeli outposts.

Powell touched down in Safed, headquarters of Israel's northern command with Lebanon and Syria in view off the horizon, where he was meeting with the commander, Maj. Gen. Gaby Ashkanazi.

About 20 miles away, Hezbollah guerillas fired anti-aircraft missiles at Sheba Farms, an Israeli outpost that Lebanon continues to claim after Israel withdrew from southern Lebanon. The shelling, virtually a daily occurrence, could not be heard where Powell was being briefed by Israeli officials. There was no report of any injuries.

Powell called the briefing "sobering" and he urged all nations, especially Syria, with influence in Lebanon, to restrain Hezbollah attacks.

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State Department's Near East desk: http://www.state.gov/p/nea