RAMALLAH, WEST BANK - Mahmoud Abbas declared that he had won a Palestinian presidential election on Sunday and dedicated his victory to Yasser Arafat, the iconic leader he is replacing.

"We offer this victory to the soul of the brother martyr Yasser Arafat and to all Palestinians...," Abbas told a jubilant rally of his Fatah nationalist party in the West Bank city of Ramallah.

Balloting was extended by two hours, until 9pm (8am NZ time) because some voters were being held up by Israeli army checkpoints, election officials said.

Abbas has called for an end to armed struggle and wants to revive peace talks with Israel, helping encourage new hopes for peace in the Middle East after Arafat's death in November.

Victory for Abbas, the candidate of the dominant Fatah movement, had been widely anticipated and the early exit polls were in line with pre-election forecasts.

A poll by the Palestinian Centre for Policy and Survey Research in Ramallah gave Abbas 66.3 per cent to 19.7 per cent for pro-democracy activist Mustafa Barghouthi, with five fringe candidates sharing the rest of the vote.

An-Najah University in Nablus predicted Abbas would garner 70.5 per cent followed by Barghouthi at 24.5 per cent.

The other five other candidates ranged from a Marxist former guerrilla to an academic under US house arrest on suspicion of funnelling funds to Hamas militants.

"These are initial results but we expect Abu Mazen to win with over 70 per cent," said Abbas' campaign manager Mohammed Shtayeh, using the candidate's nickname.

"This is the choice of the people and this means that Abu Mazen has the mandate to implement his programme."While Palestinians cast their ballots, Hamas and other militant Islamic groups urged a boycott of the poll and Israel reasserted that progress towards peace depended on a halt to "terrorism and violence".

But while international monitors reported initial confusion at polling stations in Arab East Jerusalem over voter registration rolls, they said Israel had kept its promise to ease the passage of Palestinians through checkpoints.

"Anecdotal evidence coming in is that (Israeli) restrictions have been quite effectively lifted," said Les Campbell, a spokesman for foreign observers led by former US President Jimmy Carter.

The voting hours extension came after reports of low turnout in some cities.

Analysts said to build a popular mandate for peacemaking, Abbas needed at least 60 per cent of the vote and a large turnout among the 1.8 million eligible voters -- both uncertain because of the boycott by Islamic groups bent on destroying Israel.

As if to underscore the problems facing Abbas if he wins the presidency, Palestinian militants fired at least two rockets into Israel from the Gaza Strip.

There were no casualties but Abbas, 69, who took over as leader of the Palestine Liberation Organisation after Arafat died on Nov. 11, has demanded such strikes stop.

In a possible show of solidarity with Palestinian militants, the Lebanese Hizbollah group attacked an Israeli patrol in a disputed area of the Israel-Lebanon border, killing an Israeli officer.

Israel responded with an air strike against suspected Hizbollah positions and artillery fire. United Nations sources in Beirut said a French officer with an international truce monitoring force was killed but it was not immediately clear what killed him. Another officer was wounded.

"The elections are going very well and this proves that the Palestinian people are moving towards democracy. There are obstacles but the determination of the people is stronger," Abbas said after voting in the West Bank city of Ramallah.

Abbas, an architect of interim peace deals with Israel in the early 1990s, was forecast to take 52 to 65 per cent of the vote, more than twice the support commanded by his closest challenger, human rights activist Mustafa Barghouthi.

Clad in a business suit -- Arafat always wore a military uniform -- Abbas waged a crowd-pleasing campaign, pledging to uphold a struggle for statehood in Israeli-occupied territories while calling for an end to violence in a 4-year-old uprising.

"We want to see what is really required, a strategic decision to fight terrorism and violence. Elections are just a first step in the required direction," Israeli Foreign Minister Silvan Shalom told Israel Radio.

Abbas has raised eyebrows in Israel with campaign vows to insist on Palestinian statehood in all of the West Bank, Gaza and East Jerusalem, as well as a "right of return" for millions of Palestinian refugees to lands now inside the Jewish state.

Other candidates, ranging from a Marxist PLO official to a professor under house arrest in the United States on suspicion of funnelling money to Hamas militants, were forecast to garner only a few percentage points between them.

On the Israeli political front, a new government was to be sworn in on Monday after Prime Minister Ariel Sharon's coalition pacts with veteran peacemaker Shimon Peres' Labour Party and a religious faction were formally handed to parliament on Sunday.

With new partners, Sharon will have a parliamentary majority for the first time in six months to press ahead with the planned removal this year of all 21 Gaza settlements and four of 120 in the West Bank.