AFULA, ISRAEL, APRIL 6 -- A powerful car bomb killed eight people and injured more than 40 others near a crowded bus stop here today in what Islamic militant guerrillas claimed was retaliation for the Hebron mosque massacre.

The driver of the car, a 19-year-old Palestinian, was among the eight killed in the explosion, which ripped open the front of bus No. 340 as it stopped to pick up passengers on a tree-lined street in the center of this agricultural town in northern Israel.

Witnesses said the blast created a ball of flame, and many of the injured were treated for severe burns. Albert Amos, a driving teacher, told reporters that he saw two boys "burning like torches" after the blast. Police said the car was packed with natural-gas canisters, nails and explosives, which shredded the car and blew the bus apart.

Among the victims were Jewish teenagers from a nearby high school and at least one Arab, police said. Six of the wounded were listed in serious or grave condition tonight.

The blast came at the end of the 40-day Arab mourning period for the Feb. 25 Hebron massacre, in which 29 Muslim worshipers were killed at prayer by a Jewish gunman. Both Islamic Jihad, a relatively small group of Muslim extremists, and Hamas, the Islamic Resistance Movement, which has a broader following in the West Bank and Gaza Strip, claimed to have carried out the bombing.

In broadcasts from mosque loudspeakers in the Gaza Strip, Hamas activists declared, "We claim responsibility for the heroic suicide operation in Afula." A caller to a Western news agency in Jerusalem said the car was carrying 385 pounds of explosives.

The attack prompted right-wing Israeli politicians to call for suspension of the peace talks with the Palestine Liberation Organization on self-rule for Palestinians in the Gaza Strip and the West Bank town of Jericho. Binyamin Netanyahu, leader of the opposition Likud Party, demanded that Israel halt the talks and appoint a commission of inquiry into the attack, as it did after the Hebron massacre.

But Israeli Foreign Minister Shimon Peres said the negotiations would not be deterred by the assault and that Israel will "do whatever we can to continue the peace momentum."

In Cairo, PLO Chairman Yasser Arafat walked off without commenting when asked about the car bombing. The United States urged Arafat to condemn the bombing and said it would consult with other countries on whether it was appropriate to present a resolution to the U.N. Security Council, the Reuter news agency reported.

On the streets here and in Jerusalem, Israeli Jews vented anger at the government and at Arabs. Crowds gathered in this relatively poor rural town, situated just north of the pre-1967 border with the West Bank. Some chanted "Death to the Arabs!" and police moved forces into neighboring Arab villages to prevent revenge attacks.

The attack came on the eve of an Israeli holiday commemorating the deaths of millions of European Jews in the Holocaust. Israel announced a complete closure of the West Bank and Gaza Strip, barring all Palestinians from entering, and police said all cars with license plates from the occupied territories would be barred from Israel until further notice. About 50,000 Palestinians normally work in Israel each day, but the number has been reduced by an earlier closure.

The driver of the bomb-laden car was identified as Raid Zakarna, from the northern West Bank village of Kabatiya. Israeli media reports said he had served time in prison during the intifada, the nearly six-year-long Palestinian uprising against Israeli rule in the West Bank and Gaza.

Police and witnesses said the car, a blue Opel, bore yellow Israeli license plates. Witnesses said the bus had pulled to a stop to pick up passengers and that the car passed the bus, then backed up to within three yards of the front of the bus and exploded. The blast came about 12:30 p.m., just as many schoolchildren were in the area.

Israeli police said they have had to deal with a rash of attempted bombings in recent months. One car bomb last winter was detonated near a bus carrying soldiers, while at least eight car-bomb attempts have been thwarted since last September, they said. Usually, the devices are fashioned from natural-gas cylinders, which are widely available in the territories.

Shai Bouzaly, a 23-year-old who lives on an Israeli collective farm, was sitting at a bus-passenger shelter here, reading a newspaper at the time of the explosion. He said he was reading an article about the peace talks when he heard the blast and saw "a big rolling fire."

Bouzaly, in a hospital interview, added: "I started to run away from the bus shelter. I saw my clothes were burning. I ripped them off, and I ran 100 meters. People started to come and help me, but I waited for the ambulance. People all around me were burning, there were bodies -- people were not complete. I didn't look. It would be too hard. I didn't want to see, so I didn't look."

Two firemen who arrived shortly after the blast described a gruesome scene of dismembered corpses and severely burned victims. Ambulance driver Shlomo Ohayon said the scene was a "slaughterhouse" and that "people were charred, lacking limbs, lacking heads... . "

The blast killed the driver of the bus and sprayed deadly metal around the area. Tree branches were ripped off, and windows were shattered at a nearby kindergarten. Many of the victims were teenagers walking toward the bus stop from a vocational high school across the street.

"My little girl was 20 meters away in the kindergarten," said Yoram Aidan, 32, a computer specialist who lives nearby. "I saw part of the car blew into the kindergarten. For me, it's a miracle no one there was hurt. When I heard the explosion, I came running fast."

Five victims were declared dead on arrival at Afula's Haemek hospital; others were flown by helicopter to larger facilities in Haifa.

In other Arab-Israeli developments today, Israel had planned to turn over a seaside police barracks to the PLO in Gaza, but PLO officials declined to take part in the transfer on orders from PLO headquarters.

In Cairo, meanwhile, Israeli negotiators took a three-day break from peace talks in observance of the Holocaust, angering the Palestinian side. The planned arrival of Palestinian police in the territories late this week has also been postponed, officials said.