Palestinians are simultaneously commemorating what they call the Nakba or catastrophe - the exodus of hundreds of thousands of refugees at the birth of Israel.

Bush will address Israel's Knesset on Thursday, the day Palestinians commemorate the Nakba, or "catastrophe," of the Jewish state's creation, the 1948 war and the expulsion or flight of more than 760,000 people.

The people who fled or were driven from their homes in 1948 have since given rise to a U.N.-registered refugee population of 4.5 million in camps across the Middle East, including more than 1 million in the besieged Gaza Strip.

Bush's national security adviser, Stephen Hadley, told reporters on Air Force One before it arrived that the president recognized that Israel's founding "resulted in hardship for many Palestinian people."

But he said Bush was determined to "redeem that hardship" by helping to create "a homeland for the Palestinian people in the same way that Israel 60 years ago became the homeland for the Jewish people."

But when Bush addresses Israel's parliament to mark the country's 60th birthday, activists plan to darken the skies over Jerusalem with over 21,000 black balloons and hold a massive demonstration in the West Bank town of Ramallah.

Bush's speech to Israel's parliament in the disputed city of Jerusalem is part of continuing celebrations of the Jewish state's anniversary.

Israel's three Arab political parties, drawing support from the 1.2 million descendents of the 160,000 Arabs who remained in the Jewish state after the 1948 war, said on Wednesday their 10 MPs will boycott the speech.

Bush is "responsible for the deaths of hundreds of thousands of people in the region," said MP Jamal Zahalka of the National Democratic Assembly.

"His speech ... shows complete indifference to the Nakba of the Palestinian people and its suffering, and betrays his total ideological bias toward Israel."

Bush took the opportunity Wednesday to accuse Iran of trying to destabilize Lebanon through its support for the Hezbollah militia, as he reaffirmed support for Prime Minister Fouad Siniora.

"Hezbollah, the so-called protector of the Lebanese against Israel has now turned on its own people," Bush said, after meeting Israeli Prime Minister Ehud Olmert in Jerusalem. "Hezbollah is supported by Iran, and it's an Iranian effort to destabilize Lebanon's democracy, and the United States stands strongly with the Siniora government."

In southern Israel a rocket fired by Gaza militants slammed into a shopping mall in the city of Ashkelon Wednesday, wounding at least five people, at least three seriously, including a young girl.

The rocket, fired from the Gaza Strip, slammed into the building at a time when the mall was packed with shoppers. Part of the building collapsed, witnesses said.