Israeli naval forces fired warning shots Monday at a ship carrying aid to Gaza as it approached the shore, forcing it to withdraw to Egyptian waters, the vessel's Malaysian organizer told Agence France Presse.

"The MV Finch, carrying sewage pipes to Gaza, had warning shots fired at it by Israeli forces in the Palestinian security zone this morning at 0654 Jordan time (0354 GMT)," said Shamsul Azhar from the Perdana Global Peace Foundation.

Israel will resume the transfer of Palestinian tax revenue funds that it froze after a unity deal between rival Fatah and Hamas, Strategic Affairs Minister Moshe Yaalon said Monday.

"We have unblocked the funds because we have established that the agreement between Fatah and Hamas has had no effect, the security cooperation (between Israel and the Palestinian Authority) continues on the ground," Yaalon told Israeli public radio.

A Saudi diplomat was killed in a drive-by shooting near the consulate in Karachi on Monday, the second attack on Saudi interests in Pakistan's biggest city in less than a week, officials said.

The motive of the attack was not immediately clear, but authorities said they were investigating whether it was connected to the death of Saudi-born Osama bin Laden, who was killed by U.S. forces in Pakistan on May 2.

Egyptian protesters demanding the expulsion of Israel's ambassador clashed with riot police outside the Israeli embassy in Cairo on Sunday, leaving at least 24 people wounded.

The police, who were backed by the army, fired dozens of tear gas canisters at the protesters, who ripped out paving stones to throw and burned tires.

Iranian President Mahmoud Ahmadinejad branded Israel a cancer cell that must be removed Sunday, after Israeli gunfire killed 12 people and wounded hundreds as Palestinians marched in a mass show of mourning over the creation of the Jewish state.

"On the anniversary of this regime, people demonstrated in various places, but there were dead and wounded and this regime once again showed its real nature," he said in a television interview.

Egyptian Foreign Minister Nabil al-Arabi was unanimously elected Arab League chief on Sunday to succeed Amr Moussa, embarking on a challenging task as political upheaval sweeps the region.

The surprise announcement of his candidacy came after Egypt withdrew diplomat Mustafa al-Fikki from the race just moments before voting for the head of the 22-member body was due to start.

Israeli gunfire killed three people and wounded hundreds Sunday as Palestinians marched on Israel's borders with Syria and Gaza in a mass show of mourning over the creation of the Jewish state.

Tensions along the Israeli-Syrian frontier spiraled as thousands of protesters from Syria tried to force their way into the Israeli-occupied Golan Heights, prompting the army to open fire in one of the worst incidents of violence there since a 1974 truce accord.

Egypt's ex-first lady Suzanne Mubarak has responded well to treatment for "a panic attack" she suffered after being told she would be detained by the government for further questioning on corruption allegations, a hospital official said Saturday.

The official said the 70-year-old wife of ousted leader Hosni Mubarak was visited Saturday by a cardiologist who found "noticeable improvement in her condition."

A Christian man in the northern Iraqi city of Kirkuk has been kidnapped and is being held for a $100,000 ransom, police said Saturday.

Kirkuk deputy police chief Maj. Gen. Torhan Abdul-Rahman said the victim is a construction worker who did not come home from work Friday night. When officials called his mobile phone on Saturday, the kidnappers answered and demanded the money.

Six Yemeni soldiers were killed in a tribal revenge attack on Saturday in the southeastern province of al-Baida, a tribal leader and a security official said.

"Gunmen attacked an army checkpoint near Radaa, killing six soldiers," the tribal leader said, describing it as a "revenge killing."