Both Muslims and Jews hold special reverance for the area currently occupied by Israel. Both of their religions (as well as Christianity) trace their beginnings to that section of the Middle East, where thousands of years ago, Islam and Judaism merged and began with the same God, and the same patriarch (human father), Abraham.
The names and traditions may be different, but the origins are the same. Allah is God, Mohammed is the Islamic equivalant to Jesus. You would be amazed at how many similarities Christianity shares with Islam in their beliefs.
The current fighting comes from the long-standing dispute over this land that has been going since the earliest days of man. The area has been conquered and ruled by countless empires and it is no less desirable now. Before the Jews were established (by world powers) in the area, it was primarily settled by Muslims (under the Ottoman Empire, circa World War I). The Arabs of the area believe that the land was unfairly taken from them. The Jews believe their claims to the land go back to the ancient kingdom of Israel, in the Old Testament.
Additionally, many Muslims have a growing hatred of America due to our continual involvement there, which often involves countless numbers of their civilian casualties, as well as the destruction of their homes, farms, livelihood, and sacred places.
Much of the current Iraq War, first Gulf War, and growing tension with Iran stems from the post WWII involvement we had in working with the British to exploit oil from Iran. When the democratic government of Iran protested the exploitation and passed laws against it, we removed their elected leader and returned the country to a monarchy. Our actions there eventually led to a revolt, under the Ayatollah, at which time we supported Saddam Hussein's war against Iran, until Saddam got over ambitious and started war against Kuwait, essentially beginning the long, ridiculous war we are (again) invovled in now.
I'd bet my left nut that they would not hate us so much if we weren't always over there blowing things up and messing with their governments. Would you like it if Europe kept telling us what to do and blew us up if we did not comply?
in response to "the Koran tells them to kill unbelievers."
so does the Old Testament...