Associated Press An Israeli soldier takes aim at the Church of the Nativity from behind a wall of the Peace Center of Bethlehem during a meeting between Israeli and Palestinian negotiators inside the center yesterday. Israeli and Palestinian negotiators entered a second day of talks yesterday, trying to resolve the three-week standoff at the Church of the Nativity.

BETHLEHEM, West Bank - Two Palestinians inside the Church of the Nativity compound were shot yesterday, and one of them died as Israeli and Palestinian negotiators gathered next door for a second round of talks to end the standoff at one of Christianity's holiest sites.

In Washington, Secretary of State Colin Powell told Congress he had no evidence of an Israeli massacre of Palestinians at the Jenin refugee camp on the West Bank. Powell has sought to mend deep divisions between Israel and the United Nations over the composition of a U.N. team dispatched to investigate the actions of Israeli troops in the camp, where Palestinian claim there was a massacre.

"Clearly, innocent lives may well have been lost," Powell testified. But, he said, "I have no evidence of mass graves. I see no evidence that would support a massacre took place."

U.N. Secretary-General Kofi Annan has ordered the team to arrive in the Middle East by Saturday. But Israel has balked, saying it wants the mission to include people with military and anti-terrorism experience. Israel has not said what it will do if they are not added to the team.

The trouble at the church, built over a grotto where Christian tradition holds Jesus was born, began about dawn, when a Palestinian was shot and seriously wounded by an Israeli sniper. The Palestinian was standing by a window inside the church, the army and Palestinian witnesses said. He was armed, according to the Israeli army, and was evacuated to a Jerusalem hospital.

A few hours later, two Palestinians surrendered, walking out of the church with hands up and turning themselves over to Israeli soldiers. The two men were wearing civilian clothes but were Palestinian police, according to a Palestinian journalist who recognized them. The two men said they were ill.

The Palestinian who died was hit in shooting that erupted about 5 p.m., as the Israeli and Palestinian delegations were arriving to start the second day of negotiations at the peace center next to the church.

Afterward, one of the Palestinians negotiators and a priest emerged from the church, carrying a badly wounded man on a stretcher. At one point, the bloodied man fell to the ground. He was taken to a Jerusalem hospital but died a short time later, the hospital said.

After the shootout, Israeli soldiers briefly detained five journalists, including an Associated Press photographer, and confiscated their press cards.

About 200 armed Palestinians - with several dozen others - have been holed up inside the church since April 2, when they entered to escape advancing Israeli troops.