Sharon's Likud Party in the lead ahead of January vote

JERUSALEM -- Prime Minister Ariel Sharon's Likud Party is favored to emerge as Israel's strongest faction in an abbreviated election campaign, and Sharon holds a slim edge over his main rival for party leader, Benjamin Netanyahu, according to polls published Wednesday.

Israel's political turmoil has been the focus this week, but there's been no letup in Mideast violence. A Palestinian laborer shot and killed two Israelis, including his employer, in the Gaza Strip settlement of Slav on Wednesday before being gunned down by a security guard. The militant group Hamas claimed responsibility.

Despite a long rivalry with Sharon, former Prime Minister Netanyahu agreed to serve as foreign minister in Sharon's caretaker government.

Parliament approved the appointment in a 61-31 vote Wednesday.

U.S. Secretary of State Colin Powell telephoned Netanyahu to congratulate him, and the two agreed to "establish a direct line of communication," the Israeli foreign ministry said in a statement.

Another new appointment, Defense Minister Shaul Mofaz, talked by telephone to Egyptian President Hosni Mubarak, the Defense Ministry said.

Though they are facing in a primary election, Netanyahu said he saw no problem in working with Sharon before or after that ballot.