Palestinian gunmen with ties to the ruling Fatah faction took over an election building in the southern Gaza Strip on Wednesday, election officials and witnesses said.

About 40 gunmen from the Al-Aqsa Martyrs' Brigades entered the building in the town of Rafah while firing in the air, the officials and witnesses said. Election workers fled as the militants took up positions.

The gunmen are loyal to Alaa al-Hams, a militant arrested late Tuesday by Palestinian police who suspect he was involved in the kidnapping last week of three British citizens.

Gaza gunmen have been taking over government buildings and kidnapping foreigners almost daily, demanding jobs and sometimes the release of prisoners. The gunmen who took over the Rafah election office did not immediately demand the release of al-Hams, witnesses said.

Palestinian leader Mahmoud Abbas — facing a serious electoral challenge by the Islamic Hamas group in a Jan. 25 parliamentary election — has failed to rein in lawlessness and has been reluctant to confront militants. Palestinians are increasingly angered by the chaos that has engulfed Gaza and parts of the West Bank.

British aid worker Kate Burton and her parents were held for two days by Gaza gunmen last week. Other foreigners and foreign journalists have also been kidnapped in Gaza recently, and many countries have warned their citizens against visiting the coastal area.

The number of Palestinians living in poverty has climbed to nearly two-thirds this year, despite a sharp slowdown in fighting with Israel and the Israeli pullout from the Gaza Strip, according to a United Nations report issued Thursday.

The UN Office for the Coordination of Humanitarian Affairs issued the figures as it appealed for $215 million in emergency assistance for the Palestinians in 2006.

The UN office, which coordinates between the 12 UN aid agencies and several other non-governmental groups operating in the West Bank and Gaza Strip, said the poverty rate in the Palestinian areas has climbed to 64 percent from 55 percent last year.

The poverty line is defined as those living off less than $2.20 a day. But half of those living in poverty, or some 1.2 million Palestinians, live on less than $1.60 or less a day, said OCHA chief David Shearer.

The unemployment rate dropped slightly to 28 percent from 34 percent. Still, joblessness is three times higher than what it was before fighting broke out in late 2000, OCHA said.

The Palestinian economy has been hit hard by the fighting. But the election of moderate Palestinian leader Mahmoud Abbas, a joint cease-fire agreement reached in February and the Gaza pullout in September has raised hopes that the economy would begin to recover.

"While progress on the political front is understood as the only means to ultimately alleviate poverty and suffering, as yet there has been no sign of humanitarian improvement," the UN report said.

It cited continued Israeli closures and other travel restrictions as drags on the economy. During spikes in violence, Israel restricts Palestinian movement to stop militants from launching attacks. The Israeli separation barrier being built in the West Bank has also further restricted Palestinian movement.

Francine Pickup, the humanitarian affairs officer at OCHA, said while Palestinians have had better access to jobs in Israel compared to the same time last year, the level of poverty has worsened because "their coping mechanisms are running out after five years of conflict."

"People can no longer rely on savings, are increasingly in debt, and are no longer able to continue the deferring of debt repayments," she said.

Mark Regev, spokesman for the Israeli Foreign Ministry, said the government will do what it can to bolster the Palestinian economy. "Israel hopes we will see both political and economic development in Gaza. The development will allow the creation of a more successful Palestinian society. Their success is our success," he said.

Thursday's report marked the fourth consecutive year OCHA has sought emergency assistance from the international community. The aid would be for emergency measures such as job creation, agriculture and food. Last year, the UN agencies requested $302 million for emergency aid, of which they received only 59 percent.

Under the leadership of international envoy James Wolfensohn, a former World Bank president, international donors also have pledged $3 billion annually for reconstruction projects for the next three years, mostly in the Gaza Strip.

RAFAH TERMINAL, Gaza Strip - Palestinian leader Mahmoud Abbas opened the Gaza-Egypt border in a festive ceremony Friday -- a milestone for the Palestinians who for the first time took control of a frontier crossing without Israeli veto powers and gained some freedom of movement.

The opening was seen as a step toward Palestinian independence and a boost to Abbas as he faces a fierce challenge by the Islamic militant group Hamas in Jan. 25 parliamentary elections.

''This is a great day. It is a day of happiness ... because it means an enormous step forward toward the freedom of the Palestinian people,'' Marc Otte, the European Union representative in the Middle East, told 1,200 guests attending the ribbon-cutting.

Abbas said he hoped the Palestinians' new gate to the world would spur investment, but said there can be no economic recovery without an end to lawlessness in the territories. ''The magic key that can give us everything is the key of security,'' he said.

He also announced a majority security clampdown, saying it has already begun in some West Bank towns and would also move to Gaza.

Abbas reiterated that the election would be held on time, dispelling rumors he would seek a delay because of disarray in his Fatah party, which held primaries in some districts Friday.

The Rafah terminal on the Gaza-Egypt had been closed by Israel as its troops withdrew from the Gaza Strip in September. After two months of international mediation and a final push by Secretary of State Condoleezza Rice, Israel agreed that the Palestinians would run their side of the border, with the help of European monitors.

The crossing will open to Palestinian travelers Saturday, initially for four hours a day until the European monitors get settled. After the test period, opening hours will be expanded.

''From this moment, we feel we are free,'' said Fathia Najar, 55, one of a group of Palestinian travelers waiting near Rafah to cross the next day. ''Before this, we lived in a jail.''

Before the Israeli pullout, travel through Rafah was often difficult. The terminal was repeatedly closed on security grounds, and at times travelers waited for days to get through.

Heavy security ringed the terminal during Friday's ceremony, with police setting up roadblocks on access roads. Police officers also lined the main north-south road from Gaza City to Rafah.

The border deal backs Abbas' message that Palestinians can only gain independence through negotiations with Israel. Hamas says such talks are pointless and that it drove Israel out of Gaza by force.

Despite the Abbas-Hamas rivalry, Hamas leader Mahmoud Zahar attended the opening ceremony. ''Our presence here does not mean we support this agreement,'' the Hamas leader said.

In preparation for the opening, the terminal was painted, workers replaced ceiling tiles and installed new lighting. Rows of blue and orange chairs filled the arrivals and departure halls, along with batteries of computers, X-ray machines, metal detectors and security cameras.

The key dispute between Israel and the Palestinians had been over whether Israel should get real time surveillance videos from Rafah and be allowed to veto the entry or departure of some passengers. In the end, Israel dropped both demands.

Otte, the EU representative, said the operation of the terminal would be a test for renewed Israeli-Palestinian cooperation, after nearly five years of bloody fighting.

Initially, 20 EU monitors will supervise Rafah operations, said Julio Delaguardia, spokesman for the contingent. He said the first group of monitors comes from Italy, Denmark, Romania and Luxembourg. In coming week, the group will grow to 70, with additional monitors from France, Spain, Portugal, Sweden and Finland.

He said he hoped all monitors would be in place within a month, to handle large crowds for an upcoming pilgrimage season to Saudi Arabia.

The main points of the Israeli-Palestinian deal on Gaza border crossings:

GAZA-EGYPT BORDER: The target date for reopening the Rafah terminal at the Gaza-Egypt is Nov. 25. The border will be operated by Palestinian and Egyptian border officials, with the presence of European monitors on the Palestinian side. Israel will be able to watch traffic at Rafah via closed-circuit TV cameras, and can raise concerns about travelers it considers a security risk, but has no veto powers, Palestinian negotiator Saeb Erekat said.

KARNI CARGO CROSSING BETWEEN GAZA AND ISRAEL: Israel agrees to the passage of at least 150 export trucks from Gaza a day by year's end, and at least 400 trucks a day by the end of 2006. It also guarantees that in the upcoming harvest season, all agricultural produce from Gaza will be allowed through the passage.

PASSAGE BETWEEN THE WEST BANK AND GAZA: Starting Dec. 15, bus convoys carrying Palestinians will move between the two territories, traveling through Israel. Starting Jan. 15, truck convoys will also be allowed between the West Bank and Gaza.

ROADBLOCKS IN THE WEST BANK: Israel promises to minimize disruptions to Palestinian daily life in the West Bank, and come up with a plan for removing more army checkpoints in the area by Dec. 31.

GAZA SEAPORT: The Palestinians can begin building a seaport in Gaza.

GAZA AIRPORT: The runways of the Gaza International Airport were largely destroyed by Israel during nearly five years of fighting. The two sides agree on the importance of the airport, and discussions on the issue will continue.