Click on our Special Report for full coverage of Israel's 60th anniversary, featuring interviews, debates and reportages from Israel and the Palestinian Territories.

Thousands of Palestinians in Gaza and the West Bank mourned “Nakba” day, marking the “catastrophe” that the creation of Israel has come to represent for them.

Roughly 700,000 Palestinians, half the Arabs living in former British-administered Palestine, fled their homes as the Jewish state was declared on May 14, 1948. Most, at the time, thought their departure was only temporary. Sixty years later, many Palestinians and their offspring still live precarious lives in the Territories and in camps scattered around Lebanon and Jordan.

Speaking to Palestinians in a televised speech, Palestinian President Mahmoud Abbas appealed for reconciliation and an end to Israeli settlement building on the 60th anniversary of Israel's birth.

"Sixty years have passed ... It's time to end the Nakba for the Palestinian people," Abbas, whose US-backed talks with Israeli Prime Minister Ehud Olmert have shown little sign of progress.

Arab MPs to boycott Bush’s speech

In the occupied West Bank and Arab east Jerusalem, demonstrators paused on the tomb of Palestinians’ historic chief, Yasser Arafat. At noon, sirens went off. A minute of silence was observed by cars and walkers-by.

Activists have also released 21,915 black balloons - one for each day since Israel's creation in 1948 - to darken the skies over Jerusalem after a massive protest held at midday in Ramallah.

In Jerusalem, Arab members of Parliament announced that they would boycott George Bush’s speech to the Knesset.

Division marks celebrations in Gaza

In Gaza, where the Islamist movement Hamas – which has been running the territory for nearly a year – called for a demonstration, Gazans started to amass at the Erez border crossing with Israel.

Division marked the anniversary of the “Nakba” this year, as each party chose to organise its commemorations separately, Abu Dagga reports. According to reports, Hamas prevented other parties from holding their own demonstrations.

Meanwhile, Palestinians in Gaza are bracing for Israeli reprisal following a rocket attack on Wednesday. The attack injured over 14 Israelis at a shopping center in Ashkelon. “Palestinians are convinced Israelis will launch a major reprisal attack on Gaza,” said our correspondent. But this attack is not expected while foreign dignitaries are present on Israeli soil, he added.

Israeli Infrastructure Minister Benjamin Ben-Eliezer, a member of Israel's security cabinet, warned on Thursday that "[t]he Israeli army has never been this ready to launch a large-scale operation in Gaza."