* Palestinian rivals signal desire for reconciliation
* Egypt plans new talks between Hamas and Fatah
* Israel fears Hamas could topple Abbas
(Recasts for Abbas comments)
GAZA, Jan 4 (Reuters) - President Mahmoud Abbas predicted
the end of a five-year split between the two big Palestinian
factions as his Fatah movement staged its first mass rally in
Gaza with the blessing of Hamas Islamists who rule the enclave.
"Soon we will regain our unity," Abbas, whose authority has
been limited to the Israeli-occupied West Bank since the 2007
civil war between the two factions, said in a televised address
to hundreds of thousands of followers marching in Gaza on
Friday, with yellow Fatah flags instead of the green of Hamas.
The hardline Hamas movement, which does not recognise
Israel's right to exist, expelled secular Fatah from Gaza during
the war. It gave permission for the rally after the deadlock in
peace talks between Abbas's administration and Israel narrowed
the two factions' ideological differences.
The Palestinian rivals have drawn closer since Israel's
assault on Gaza assault in November, in which Hamas, though
battered, claimed victory.
Egypt has long tried to broker Hamas-Fatah reconciliation,
but past efforts have foundered over questions of power-sharing,
control of weaponry, and to what extent Israel and other powers
would accept a Palestinian administration including Hamas.
An Egyptian official told Reuters Cairo was preparing to
invite the factions for new negotiations within two weeks.
Israel fears grassroots support for Hamas could eventually
topple Abbas's Palestinian Authority (PA) in the West Bank.
"Hamas could seize control of the PA any day," Israeli Prime
Minister Benjamin Netanyahu said on Thursday.
The demonstration marked 48 years since Fatah's founding as
the spearhead of the Palestinians' fight against Israel. Its
longtime leader Yasser Arafat signed an interim 1993 peace
accord that won Palestinians a measure of self rule.
Hamas, which rejected the 1993 deal, fought and won a
Palestinian parliamentary election in 2006. It formed an uneasy
coalition with Fatah until their violent split a year later.
Though shunned by the West, Hamas feels bolstered by
electoral gains for Islamist movements in neighbouring Egypt and
elsewhere in the region - a confidence reflected in the fact
Friday's Fatah demonstration was allowed to take place.
"The success of the rally is a success for Fatah, and for
Hamas too," said Hamas spokesman Sami Abu Zuhri. "The positive
atmosphere is a step on the way to regain national unity."
Fatah, meanwhile, has been riven by dissent about the
credibility of Abbas's statesmanship, especially given Israel's
continued settlement-building on West Bank land. The Israelis
quit Gaza unilaterally in 2005 after 38 years of occupation.
"The message today is that Fatah cannot be wiped out," said
Amal Hamad, a member of the group's ruling body, referring to
the demonstration attended by several Abbas advisers. "Fatah
lives, no one can exclude it and it seeks to end the division."
In his speech, Abbas promised to return to Gaza soon and
said Palestinian unification would be "a step on the way to
ending the (Israeli) occupation".
(Editing by Dan Williams, Alistair Lyon and Jason Webb)