Abbas upbeat on Palestinian unity

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A Palestinian unity government could be in place by December, Palestinian President Mahmoud Abbas has said.

Talks had made "great progress", said Mr Abbas, whose own Fatah faction lost to Hamas in elections this year.

The two sides have been deadlocked for months over the formation of a unity government acceptable to the West.

Sanctions were imposed on the Hamas-led administration by Israel and Western countries, which see Hamas as a terrorist organisation.

Mr Abbas made his comments during a speech marking the second anniversary of the death of his predecessor, Yasser Arafat.

"I announce to our people the happy news that we have achieved great progress on the path to establishing a national unity government that can end the siege and open the way toward a political settlement," Mr Abbas said.

"I expect, God willing, this government will see the light before the end of this month."

Thousands of people - carrying pictures of Mr Arafat and waving Palestinian flags - gathered in Ramallah for the ceremonies on Saturday.

Resignation offer

Mr Abbas held talks with the Palestinian Prime Minister Ismail Haniya of the ruling Hamas group on Friday.

Afterwards, Mr Haniya said he hoped a new cabinet could be in place within three weeks.

Mr Haniya said the US did not want him to lead any unity government

Drawn-out negotiations between Hamas and Fatah interrupted by political and security crises have failed to achieve a breakthrough on the unity government's formation.

Mr Haniya also said he was willing to resign if this would end the Western aid boycott.

The US and Europe imposed crippling sanctions on the Palestinian authority in March because Hamas refused to recognise Israel, renounce violence and respect previous Israeli-Palestinian agreements.

Hamas insists it will never join a government that recognises the state of Israel.

Mr Abbas also used his speech in Ramallah to stress the Palestinians' claim for a state in the West Bank and Gaza, with east Jerusalem as its capital.

"Peace and security will not be realised under occupation and settlement and the inclusion of noble Jerusalem into Israel," Mr Abbas told a crowd of thousands of Palestinians.