Russian President Vladimir Putin told Sharon in a telephone call on Friday that Israel and Palestinians needed to resume peace talks to prevent more Middle East bloodshed.
The Kremlin press service said Sharon had told Putin that the Israeli government intended to restrict its response to extremist acts to the "necessary minimum."
About 680 people have been killed since September, including more than 500 Palestinians and about 150 Israelis.
SPORADIC VIOLENCE
In the Gaza Strip, Palestinian witnesses and hospital officials said Israeli troops shot and wounded 14 youths in stone-throwing clashes.
The Israeli army said an explosive device went off without causing damage close to the settlement of Gilo, which Israel calls a Jerusalem neighborhood. Witnesses reported stone throwing at Israeli troops near Ramallah and Bethlehem in the West Bank.
Israel remained on high alert for suicide bombings by the Muslim militant groups Hamas and Islamic Jihad.
"They are very grave warnings and very precise," Avi Pazner, an Israeli government spokesman, said without elaborating. He called on the Palestinian Authority to "do everything it can to prevent them and to arrest the attackers before they arrive."
Israeli security sources said they had prevented a suicide attack due to be carried out in the port city of Haifa on Friday after arresting two Islamic Jihad activists armed with 10 kilos of explosives near Jenin.
Palestinian cabinet minister Saeb Erekat was due to meet U.S. envoy David Satterfield in Jericho, in the West Bank, later on Friday as diplomatic moves continued to try to coax the parties into implementing a U.S.-backed truce-to-talks formula.
Sharon accuses Arafat of giving free rein to militants and has refused to resume peace negotiations until there is a complete halt to violence.
The Palestinians say talks cannot take place until Israel withdraws from nine Palestinian offices it seized in and around Jerusalem last Friday, including Orient House, the unofficial PLO headquarters in the city.
In the northern Israeli Arab town of Nazareth, some 10,000 demonstrators protesting the Orient House takeover denounced what they called Israel's policy of escalation.
A Palestinian official in Gaza, Osama al-Ali, charged Israel with "creating a human catastrophe" by stopping up to 1,000 sick Palestinians passing from Egypt to Gaza via the Rafah crossing. The Israeli army said it allowed all humanitarian cases to cross.