The rival Palestinian Hamas and Fatah faction have suspended unity talks in Cairo after they were unable to reach an agreement, sources say.

The Egyptian-mediated process will resume in three weeks, Nabil Shaath, a senior Fatah official, said on Thursday.

"There are new creative proposals and each movement needs to consult its leadership," he said.

However, Shaath refused to call the suspension of the talks a failure, saying "it was neither a failure nor a success".

Senior delegations from Hamas, which controls the Gaza Strip, and Fatah, led by Mahmoud Abbas, the West Bank-based Palestinian president, had resumed talks on Wednesday. 

It was the third round of meetings between the two factions since Hamas, winners of 2006 parliamentary elections, seized full control of the Gaza Strip in a week of fighting in June 2007.

Transitional government
  
Hamas and Fatah had previously agreed to form committees that would resolve their differences and form a unity transitional government that would prepare for general elections early next year.

The committees began work last month, but they adjourned their talks after failing to agree on a new government, with Hamas insisting that it would not commit to previous agreements between the Palestinian Authority and Israel.

Hossam Zaki, the Egyptian foreign ministry spokesman, said earlier on Thursday: "There are no indications of progress yet.

"The dialogue is still in the same place when it comes to the important issues of contention. But work is still under way to reach an understanding and ways to overcome these issues."

Israel's devastating 22-day war in the Gaza Strip has made the outcome of the talks more important for the Palestinian territory.

In March, international donors pledged $4.5bn in reconstruction aid, but many countries have said they will not deal with the Hamas government in Gaza.

The so-called Quartet of Middle East negotiators - Russia, the United States, United Nations and European Union - has said Hamas must  recognise Israel and commit to past Palestinian-Israeli agreements before it deals with the group.

"The reconciliation process is still slow, burdened with foreign conditions,'' Khaled Meshaal, Hamas's exiled political leader, said at a rally in Syria on Thursday.

"What does Israel's recognition have to do with Palestinian reconciliation?"