Associated Press

A demonstrator holds posters of the Palestinian leader Yasser Arafat in Gaza City yesterday. Thousands of Palestinians of all political factions marched in Gaza City during a demonstration to mark the anniversary of the declaration of Palestinian Independence.

JERUSALEM - Palestinian police arrested a top Islamic Jihad activist in the West Bank town of Jenin yesterday, setting off a violent protest against Yasser Arafat's security force.

The arrest came as Secretary of State Colin Powell scheduled a key Middle East policy speech for next week. An Israeli peace campaigner and a Palestinian spokeswoman said the United States no longer backs Israel's demand for seven days of complete calm before peace talks resume.

Islamic Jihad leaders said Palestinian police pulled Mahmoud Tawalbi off a Jenin street and jailed him in Nablus, 15 miles south. Tawalbi, 23, was suspected by Israel of recruiting suicide bombers and sending them into Israel.

About 3,000 Palestinians protesting the arrest surrounded Palestinian Preventive Security headquarters in Jenin, firing guns, throwing grenades and burning cars. A security official, speaking on condition of anonymity, confirmed that Tawalbi had been arrested.

Suicide bombers from Islamic Jihad and Hamas have killed dozens of Israelis and wounded hundreds in nearly 14 months of fighting.

Raanan Gissin, spokesman for Prime Minister Ariel Sharon, said the arrest shows Palestinians "are doing what they are supposed to do." He said Tawalbi had been arrested in the past. "This time I hope they will keep him behind bars," he said.

Israel demands Arafat order the arrest of militants, and the U.S. State Department wants Arafat to move against the violent groups. The State Department said Powell would deliver a speech on Middle East policy Monday at the University of Louisville. Saturday, President Bush told the United Nations the goal of U.S. policy is a Palestinian state living in peace next to Israel. In an interview Sunday, Powell referred to Palestine, saying the state-in-making should be called by its proper name.

Palestinians have welcomed the new U.S. initiative, but Israeli officials are skeptical. Sharon has insisted there can be no negotiations until all violence stops. Up to now, the United States has gone along with that.

But that may be changing, said Israeli peace activist Yossi Beilin and Palestinian spokeswoman Hanan Ashrawi, after separate meetings with State Department officials.

They said the seven days of calm Israel requires to precede an agreed-on program for restarting peace talks is no longer a prerequisite, as far as the United States is concerned.

Ashrawi said U.S. officials "knew there wouldn't be 100 percent quiet, given the fact of the (Israeli) occupation, but there would be an attempt to calm the situation and build confidence."

Beilin told Israel radio that U.S. officials, including Powell, realized the seven-day requirement "is a recipe for never getting to talks." Israeli officials say they have not been notified of a change in U.S. policy.