Palestinians end talks in Cairo without deal

CAIRO (Reuters) - Rival Palestinian factions ended talks in the Egyptian capital Monday without bridging internal rifts that have undermined prospects for peace negotiations with Israel, participants said.

Egypt's intelligence chief Omar Suleiman, who has mediated for nearly a year now without visible success, had expressed frustration at the continuing impasse, they added.

"He told negotiators the world was not going to wait forever for them to unite and that as long as the Palestinians did not end their differences, the Palestinian cause and the peace process could be hampered," a Palestinian official told Reuters.

Talks are stalled on a range of issues -- from creating a unified security force, to scheduling fresh elections, to charting the future with Israel, which is currently the most powerful force in the lives of both of the main factions.

Egypt had sought to put pressure on the two sides to form a committee of Hamas and Fatah leaders plus three other major groups to agree a deal.

Hamas negotiator Ismail al-Ashqar said both sides had rejected that proposal and said the focus would again turn to trying to form a unity government.

"The issues that remained from yesterday remain unsettled today," said Zakaria Al-Agha, a senior Fatah negotiator. "Progress was not achieved and the Hamas position remains unchanged."

Egypt set the next round of talks for July 5 with the aim of reaching a compromise deal by July 7, participants said.

The committee Egypt had proposed was to oversee reconstruction of Gaza, heavily damaged in Israel's January offensive, revamp security services and prepare for Palestinian presidential and parliament elections set for January 25, 2010, officials said.

Hamas Islamists running the Israeli-blockaded Gaza Strip are not prepared to recognize Israel and conclude a permanent peace. They will only go as far as a 10-year truce, which the Jewish state says is no substitute for a comprehensive peace.

The Fatah group of Palestinian President Mahmoud Abbas, which administers the Israeli-occupied West Bank, is willing to negotiate peace with Israel including full recognition, in return for the creation of a Palestinian state in the West Bank and Gaza Strip, where it currently has no power.

Senior Fatah negotiator Nabil Shaath said the two sides discussed the formation of a joint security force in Gaza.

"We see that the joint force is a recipe for fighting and civil war and therefore the joint force is not acceptable to Hamas," Ashqar of Hamas said.

Hamas and Fatah armed units fought a brief but bloody civil war that culminated in Hamas's seizure of the Gaza Strip in 2007 and the eviction of Fatah forces.

(Writing by Nidal al-Mughrabi; editing by Douglas Hamilton and Edmund Blair)