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Washington plans to curtail contacts with President Mahmoud Abbas's Fatah faction and other parties if they join a Palestinian government led by the militant group Hamas, Western diplomatic sources said on Monday.

The warning came as Fatah officials held another round of inconclusive coalition talks in Gaza with Hamas, which defeated long-dominant Fatah in January elections.

Fatah has so far said it has no intention of joining the new government, which the law states must be formed by the end of the month, unless Hamas, whose charter calls for Israel's destruction, changes its political program.

Hamas plans to present a new "position paper" to Fatah before talks resume on Tuesday and aims to form a government by the end of the week, Hamas spokesman Sami Abu Zuhri said.

Diplomatic sources said US restrictions on contacts and assistance to Hamas would apply to members of Fatah and other parties if they joined a government under the militant group.

Bush administration officials are barred from direct contact with Hamas and US law bans financial support for the group, classified as a terrorist organization by the State Department.

"If Fatah joins as an organization, it would fall into the same category," said a diplomatic source involved in US deliberations. "Of course, if Hamas and other government members accept the Quartet principles, that changes the situation."

Israel says that peace talks, stalled for almost a year by violence, cannot resume unless Abbas dismantles militant groups and that it will not negotiate with a government led by Hamas or any group bent on destroying the Jewish state.

Peres meets Abbas

But Shimon Peres, a veteran statesman and confidant to interim Prime Minister Ehud Olmert, met Abbas in Jordan over the weekend to discuss continuing humanitarian aid to the Palestinians, a senior Israeli government source said.

Israel and the Quartet of Middle East mediators -- the United States, the European Union, the United Nations and Russia -- have called on Hamas to renounce violence, recognize the Jewish state and abide by interim peace deals with Israel.

Palestinian negotiator Saeb Erekat played down the possibility of Washington curtailing contacts with Fatah.

"The Americans know our position very well. We told them that there will be one policy for the Palestinian Authority, not two," Erekat said, apparently referring to PA chairman Abbas's calls for an end to violence and resumption of peace talks.

Bringing Fatah, which is committed to seeking a negotiated peace with Israel, into the new government could help Hamas avoid political turmoil at home and undercut US and Israeli efforts to isolate the group internationally.

While Hamas members are expected to run key ministries including interior and foreign affairs, the group may appoint Palestinians from rival parties, technocrats and independents in the hope of easing international pressure.

The US message to Hamas leaders, diplomats said, was that the pressure would not ease even if they appointed outsiders.

US officials had told Abbas and other senior Fatah members in recent meetings that Washington opposed the faction joining the government, Palestinian officials said.

Hamas has masterminded nearly 60 suicide bombings against Israelis since a Palestinian revolt erupted in September 2000. But it has largely observed a truce declared early last year.

(Chinadaily.com via agencies March 14, 2006)