Rival Palestinian factions celebrated the signing of a reconciliation pact they hope will end their four-year split and accelerate efforts to form an independent state.

But the agreement faces fierce opposition from Israel, places new hurdles on American-led efforts to forge a peace agreement between the Israelis and Palestinians, and still must overcome lingering distrust between the two factions: the moderate secular Fatah party in the West Bank and the militant Islamist group Hamas, which controls the Gaza Strip.

In a sign of the ongoing tensions, Wednesday's ceremony in Cairo — where the interim Egyptian government brokered the deal — was delayed for two hours because of a last-minute spat over whether Hamas leader Khaled Meshaal would be seated on the podium with Fatah leader Mahmoud Abbas and permitted to address guests.

The agreement is a political gamble for Abbas, who in recent months has shifted his focus from long-stalled peace talks with Israel to winning U.N. recognition in September for a Palestinian state.

By ending the Palestinian infighting and making Abbas the government leader of both Palestinian territories for the first time since 2007, the pact could propel his U.N. strategy and increase pressure on Israel.

Yet partnering with Hamas — which the U.S. and Israel call a terrorist organization — could also backfire. It may taint Abbas' international reputation for being a moderate or alienate the U.S. and other nations that provide much of his government's financial backing. Hamas, which last month renewed rocket attacks on southern Israel from Gaza, refuses to recognize Israel's right to exist or to renounce violence.

"We assure our stance on condemning all forms of violence and terrorism," Abbas said Wednesday.

But Israeli Prime Minister Benjamin Netanyahu has warned that any Palestinian Authority government that includes Hamas will bring the peace process with Israel to a halt.

"What happened today in Cairo is a tremendous blow to peace and a great victory for terrorism," Netanyahu told reporters during a visit to London, where he met with British leaders to rally opposition to the pact.

Abbas "knows he's walking a very fine line, certainly with Israel and most definitely with the U.S.," said an international diplomat in Israel who spoke on condition of anonymity. "Americans will be studying this very carefully."

The agreement is the latest setback to an Obama administration peace effort that has been in disarray for months. Though administration officials say they are withholding judgment on the new Palestinian government, they acknowledge that it has thrown further U.S. aid, planning for peace talks, and even future contacts with Palestinian officials into doubt.

Washington provides about $500 million a year to the Palestinians, including about $150 million for military training. That money has been disbursed for the year, so there is no immediate threat of a cutoff, officials say. But a strict federal law bars any support for the Palestinian Authority if its government includes terrorists as defined by U.S. law.

Since Hamas is officially designated a terrorist organization, U.S. officials could be restricted from training Palestinian Authority security forces and from other official contacts as well.

Skeptics, including some in Abbas' circle, warned that the unity deal could still fall apart given the deep ideological and strategic differences between Fatah and Hamas. The chasm was apparent in their reactions this week to the U.S. killing of Al Qaeda leader Osama bin Laden, which Fatah officials praised and Hamas leaders condemned, calling Bin Laden a "holy warrior."

In his remarks Wednesday, Abbas called on the international community to support a soon-to-be unveiled Fatah-Hamas unity government and predicted its success.

"We have turned the page on division forever," said Abbas, who is expected to name a prime minister and set the government's policies. "The Palestinian cause has gathered momentum and a unified voice."

But he offered few details about the new government, saying it would continue to oppose armed resistance.

Meshaal, seated in the audience, was allowed to speak after Abbas. However, live television coverage of the ceremony was prohibited so organizers could edit out any potential disruptions, officials said.

In his remarks, Meshaal did not directly address the use of violence, but he called for Palestinians to resort to "every method of resistance." In recent days, Hamas officials have said they might agree to a cease-fire with Israel, but they reiterated their refusal to recognize the Jewish state's right to exist.

Fatah leaders say it doesn't matter if Hamas fails to recognize Israel as long as the new government does, but it remains to be seen whether such a position will be acceptable to the U.S. and other nations.

It's unclear who will be named prime minister or what role, if any, current Palestinian Authority Prime Minister Salam Fayyad will have in the new Cabinet.

For now, it's likely that Fatah security forces will retain control of the West Bank and Hamas forces will police Gaza, but a joint committee will be formed to investigate ways to unite them.

Similar committees will plan for presidential and legislative elections next year and look into ways to revamp the Fatah-dominated Palestine Liberation Organization to include Hamas and other factions.

The hastily arranged reconciliation deal came as a surprise last week to U.S., Israeli and even many Palestinian officials. It could scuttle renewed international talks or increase pressure on Netanyahu to unveil a counter peace initiative, which he has said he might do later this month during a U.S. visit.

"The Palestinians are showing determination, demonstrating an independent personality, and signaling that they are not standing by and waiting for someone else to do the job for them," said Bar-Ilan University political analyst Menachem Klein. "They are creating conditions that could definitely bring them closer to a state.... For this reason, it is a very important step."

Though several past attempts at reconciliation have failed, some said the factions now understand that they need each other and that the division had become a major distraction in their struggle against Israel.

Abbas "cannot go to the United Nations to get recognition of an independent state when he doesn't control half of the territory of this state, and Hamas cannot build a state in Gaza and be isolated forever," said Naji Shurrab, a political science professor at Al Azhar University in Gaza.

Both sides were also under growing pressure from the Palestinian public to end their division, spurred by the recent unrest in the Arab world, which robbed each of key political support. Ousted Egyptian President Hosni Mubarak was a staunch ally of Abbas, while Hamas leaders may need to abandon their base in Syria given the violence there.

For Hamas, the deal could open the door to greater international legitimacy and funding to improve conditions in the impoverished seaside enclave of Gaza. Egypt has also promised to reopen the Rafah border crossing, which has been restricted for the last four years as part of Israel's security cordon around Gaza.

Western reaction to the agreement will be crucial to the deal's success, analysts say, but most governments so far say they will reserve judgment until more details are released.

"We don't know yet what this means in practical terms," said Mark Toner, a State Department spokesman.

President Obama is preparing a major speech on the so-called Arab Spring revolutions and related issues, but it remains to be seen what, if anything, will be included on the Israeli-Palestinian peace efforts. He was widely expected to lay out certain principles for the negotiations that he has been trying to restart for more than two years.

The previous Hamas-Fatah unity government collapsed in 2007 in part because the U.S. and other nations refused to recognize it unless Hamas agreed to recognize Israel, give up violence and honor past peace agreements. After a power struggle and brief armed clash with Fatah, Hamas seized control of Gaza.

Some Mideast experts say the unity pact reflects a willingness on the part of Abbas and other Palestinian leaders to forge ahead without U.S. aid, if necessary.