ISRAEL REJECTS LINK WITH GULF SETTLEMENT

Israeli Prime Minister Yitzhak Shamir has rejected Western suggestions that an end to the Gulf crisis could herald a settlement of the Arab-Israeli dispute. Leaders of the United States, Soviet Union, Britain, and France have recently stressed the need to resolve the Palestinian problem once Iraq quits Kuwait.

Mr. Shamir says that Israel will never accept linking a Gulf settlement to its withdrawal from the West Bank and Gaza Strip.

Meanwhile, Palestine Liberation Organization leader Yasser Arafat and Jordan's King Hussein met yesterday to discuss possible links between a Gulf resolution and a Palestinian settlement.

Jordan, with half its oil supplies cut off by Saudi Arabia for its perceived pro-Iraqi stance, announced during the weekend emergency energy-saving measures and reduced the official working week.

In a separate development, Israeli police shot and killed at least eight Arab protesters and wounded more than 55 in East Jerusalem yesterday, witnesses said.

The protest erupted after reports that a group of Jews planned to try to lay the foundations of a new Jewish temple in the Old City's Temple Mount, Palestinians said.

Two British diplomats arrived in Baghdad Sunday after spending six weeks confined in Britain's blockaded embassy in Kuwait. Their withdrawal leaves only Ambassador Michael Weston and the consul at the embassy, one of only a handful of diplomatic missions still manned in defiance of an Iraqi order to close. The last two Italian diplomats in Kuwait also arrived in Baghdad over the weekend after their mission ran out of fuel.