The Islamist Hamas movement expressed reservations Sunday over an Egyptian plan for reconciliation with the Fateh Party of Palestinian President Mahmoud Abbas.

"The Egyptian plan is a document suggested for discussion and Hamas will not treat it as a final draft to be signed," Hamas spokesman Sami Abu Zuhri told reporters in Gaza City days before the factions were to meet in Egypt.

The two main Palestinian movements have been bitterly divided since Hamas seized power in Gaza in June 2007, confining Abbas' rule to the Israeli-occupied West Bank and cleaving Palestinians into two hostile camps.

They could grow even more divided in January, when Abbas' four-year term comes to an end under Palestinian law. Hamas has said it will cease to recognise him as president after January 9.

Abbas loyalists, citing a different clause in the constitution, have said he should continue to rule until new presidential and parliamentary elections are held, which could extend his mandate to January 2010.

Abu Zuhri said Hamas wanted the Egyptian plan to succeed, but expressed reservations about its proposal to create a politically independent transitional government to pave the way for new elections.

"That would mean an automatic extension for Abu Mazen [Abbas]," Abu Zuhri said, adding that such a decision would require further discussion.

Hamas rejected a clause in the agreement which would have brought the movement into Abbas' Palestine Liberation Organisation (PLO), which is currently holding US-backed peace talks with Israel.

"We are entering into a dialogue to bring about reconciliation, not to provide cover for Abu Mazen to continue these futile negotiations," Abu Zuhri said. Hamas is pledged to the destruction of the Jewish state.

"We cannot accept any encroachment on the [armed] resistance or provide a mandate for the continuation of the negotiations, which provide a cover for the occupier to continue its crimes," he said.

The Islamist movement even questioned the title of the document, saying it should be called the "Project for Palestinian Reconciliation" instead of the "Palestinian National Project". Although Hamas won parliamentary elections in 2006 the United States, the European Union and Israel blacklist it as a terror group and in the past have boycotted Palestinian governments that include Hamas.

Representatives from every major Palestinian political movement have been invited to Cairo on November 9 to discuss the plan, which has been welcomed by Fateh and 11 other factions.

‘Intolerable situation’

Israel on Sunday decided to cut off all funding for illegal settlement outposts in the occupied West Bank in response to an escalation of settler attacks on its security forces.

The decision would apply to the more than 100 wildcat outposts considered illegal under Israeli law, but not to the more than 120 official settlements. The international community considers all West Bank settlements to be illegal.

The decision was taken after settlers and Israeli security forces clashed for the fourth time in less than two weeks, an escalation in violence that outgoing Prime Minister Ehud Olmert called an "intolerable situation". "There is a not insignificant group of outlaws that are behaving in a manner that is threatening the rule of law," Olmert said ahead of a weekly Cabinet meeting. "This is an intolerable situation that we refuse to accept." The decision came after teenage settlers hurled rocks at border police near the West Bank town of Hebron on Saturday, lightly injuring two of them.

Defence Minister Ehud Barak also condemned the violence, calling it a "grave phenomenon that no viable society should tolerate". A representative from the local settler council said police themselves had sparked the latest fighting by beating a 10-year-old settler child.

"The child wanted to cross a roadblock... Those who strike our children have to know that we won't turn the other cheek," Itamar Ben Gvir said.

Border police spokesman Moshe Pinchi said he had no knowledge of the alleged beating and accused the settlers of "cynically" sending minors to attack the police.

On Friday some 100 settlers clashed with police who removed an illegal structure erected by the settlers on an illegal outpost near Hebron.

Several days earlier settlers had rampaged through a Palestinian neighbourhood after police removed another outpost, slashing car tyres, throwing rocks at homes and desecrating Muslim graves.

Hardline settlers say they have adopted a "price tag" policy of attacking Palestinians or security forces every time an outpost is demolished.

Dov Lior, the head rabbi of the nearby settlement of Kiryat Arba, compared Israeli security forces to "the Nazis in Poland" during World War II.

"The Nazis also woke people up in the middle of the night and deported them. At that time also we were driven from our homes for no reason other than that we were Jewish," he said.

The government referred directly to the rabbi's remarks in its decision to sever funding to the outposts, saying it would "examine whether state employees are involved in incitement and bring them to justice". About 100 wildcat outposts dot the West Bank, some consisting of just a few trailers and others of several mobile homes connected to the power grid. They are usually built as extensions to officially established settlements.

More than 260,000 Israelis live in government-authorised settlements across the West Bank, with another 200,000 in mostly Arab east Jerusalem, which Israel seized and annexed in the 1967 Six-Day War.

The international community considers all West Bank settlements to be illegal, and the Palestinians have said the issue is the main obstacle confronting US-backed peace talks relaunched nearly a year ago.