BATTIR, WEST BANK -- More than two weeks of curfew in the Israeli-occupied territories has left their 1.7 million Palestinian residents frustrated, nearly broke, and anxious about a future that seems to hold only more disasters for their cause.

The curfew, imposed immediately after the outbreak of the Persian Gulf War Jan. 17, is the longest Israel has maintained over the West Bank and Gaza Strip since it captured them in the 1967 Middle East war. Military officials, citing widespread Palestinian support for Iraq and growing unrest before the war, say they must maintain the clampdown to prevent an outburst of violence by militants anxious to aid the Iraqi cause.

The curfew has forced thousands of families in villages like this to wait through day after day inside their cramped homes, monitoring often inflammatory Jordanian radio and television reports, husbanding dwindling supplies of food and money, and speculating about what is to come.

"I think I've stored some decent supplies, but they should last me only about 10 more days," said Nimr, an unemployed plasterer, who sat with 11 other family members in the sitting room of his father's home here on a cold, gray afternoon. "Then I'll have to buy some more, and I'll face the problem of not having money."

Palestinian economists and United Nations relief workers say no one is going hungry so far in the territories because of the curfew. Israeli authorities have issued permits to doctors, food wholesalers, milk factories, farmers and other key producers allowing them to work, and are lifting the curfew in most areas for periods of two to six hours every two or three days so people can shop for vital supplies.

However, the ban on activity is having a devastating effect on the finances of many families, who have no savings and cannot afford to go weeks without earnings. That is especially true of the more than 100,000 Palestinians who commute to work in Israel, many of whom are paid by the day.

Palestinians say the Israeli tactic of lifting the curfew at different times in neighboring towns has also broken up supply chains and led to shortages of meat, eggs, fresh fruit and even milk in some areas.

"There is no case of hunger, but we are in a bad situation and headed for worse," said Samir Huleileh, a leading Palestinian economist, who estimated that the curfew was costing $5 million a day to the $2 billion Palestinian economy. "People do not have savings to work with, and those that did have spent them. The resources for survival are less and less."

Many Palestinians believe Israel is extending the curfew to punish them for their support for Iraq. Israeli officials and media have made much of reports of Arabs "cheering from their rooftops" as Iraqi missiles have fallen on Tel Aviv, and military sources say the Palestine Liberation Organization is trying to open a "second front" of the war by firing rockets at Israeli-held territory in southern Lebanon.

Palestinian spokesmen maintain that the Israeli accounts are distorted. Though many average people may have cheered Saddam Hussein's blows against an Israel they perceive as an occupier, they say, leaders such as Faisal Husseini have publicly condemned the missile attacks. Moreover, the PLO denied initial reports that Chairman Yasser Arafat ordered the rocket attacks in Lebanon, and the organization's role in the skirmishes remains unclear.

Israeli military spokesmen, however, say there is a real risk that, if the curfew were lifted, Palestinian militants in the territories would seek to open a new front there by staging attacks or clashing with the army. Palestinian leaders and leaflets issued by underground groups openly predicted before the war that there would be an explosion of unrest in the territories in the event of a Persian Gulf conflict, these officials point out.

One government source said what really concerns Israel is the possibilty of another event like the Temple Mount clash last October in Jerusalem, in which police shot dead 18 Palestinian demonstrators. Whatever the intentions of the protesters that day, the event had the effect of shifting the world's attention from Iraq's occupation of Kuwait to Israel's treatment of the Palestinians, and put severe strains on both the U.S. alliance against Iraq and U.S. relations with Israel.

"We are not going to take the risk of allowing the radical groups to provoke something that would hurt the war effort against Iraq or detract from what we have gained in the last few weeks," said the government official, referring to the international sympathy and political credit Israel has gained from enduring nine Iraqi missile attacks without striking back.

So far, the curfew has been remarkably successful in halting what had been a steady stream of violent incidents since last October, including Palestinian attacks on Israelis and clashes between the army and demonstrators. Since the curfew began, only two Palestinian deaths have been reported as a result of army fire, one in the West Bank city of Nablus and one in the Gaza Strip.

In Battir, a village a few miles southwest of Jerusalem, residents said the army had been systematically arresting young men over the past few days, rounding up more than 30, mostly in nighttime raids on their homes. The residents speculated that Israeli authorities might be seeking to round up potential troublemakers as a prelude to lifting the curfew. However, it could not be determined with army officials whether the arrests were widespread in the West Bank or what their purpose was.

For those who sit and wait at home, pro-Iraqi Jordanian television has inflamed fears. Residents said the television, which is received throughout the West Bank, had broadcast a report saying Israel was arresting Palestinian youths and distributing them at strategic sites around the country as "human shields," the tactic Iraq says it has adopted with captured allied pilots.

Other reports circulating widely among the Palestinians say Israel deliberately avoided shooting down two of the four Iraqi missiles that have landed in the West Bank during the past week. Military officials, including Army Chief of Staff Dan Shomron, strongly denied the charge. The rumors have persisted, however, and appear to be made more credible in Palestinian eyes by Israel's failure to distribute gas masks to most West Bank and Gaza Palestinians, as it has to its own citizens.

Even those Palestinians who are skeptical of such rumors say their situation rarely has looked so bleak. "Israel is taking advantage of the situation to do whatever they want to the Palestinians. And nobody seems to care," said Saeb Erakat, a political scientist and newspaper editorial writer who has been confined to his home in Jericho since the war started.

"We are being kept under curfew until our economy is in shambles, and our moderate leadership is being meanwhile destroyed," said Erakat, referring to Israel's detention last week of a prominent West Bank leader, Sari Nusseibeh, on unspecified allegations of spying for Iraq. "When the war is over," he warned, "there could be nothing and no one left here for any peace process."