Progress in key Palestinian talks

Leaders have said they will stay in Mecca until they make a deal

Officials from the rival Palestinian factions, Fatah and Hamas, have reported progress in crisis talks in the Saudi city of Mecca.

They say they have agreed to give key cabinet posts to independents, overcoming a major stumbling block.

The factions are hoping to strengthen a fragile ceasefire in the Gaza Strip, and reach agreement on the programme of a national unity government.

Ministers have been named for finance and foreign ministries, officials say.

Reports say the new foreign minister will be Ziad Abu Amr, a former culture minister in the Palestinian Authority.

KEY ISSUES Reported sticking points: Wording of commitment to previous Israeli-Palestinian agreements Post of interior minister Areas of agreement: Principle of forming unity government Haniya to continue as PM Foreign and finance ministries to be headed by independent candidates Press sees hope for talks

Salam Fayyad is expected to be finance minister in any unity government. He has held the post previously.

There has been no agreement on who should head the crucial interior ministry, though the factions are said to have agreed in principle that it should be an independent figure.

A spokesman for Hamas, Ghazi Hamad, said: "Some issues have been tackled and some progress has been achieved here and there.

"In general, we are sparing no effort to reach an agreement as soon as possible."

Reports say the outline of an accord on forming a national unity government could be announced on Thursday night.

The talks are in the second day. The leaders of both Palestinian factions have said they will stay in Mecca until they reach a deal.

Boycott

Previous negotiations have failed to resolve whether a new government should explicitly recognise Israel.

The United States and Israel have said that any unity government must do so before a financial boycott of the government will be lifted.

Other conditions include a renunciation of violence and an acceptance of previous Palestinian-Israeli agreements.

Reports say Hamas is ready to agree to "respect" existing accords.

The political stalemate between the factions has spilled over into violence in recent months. More than 20 people died in clashes between the two sides last week.

As the talks began in earnest on Wednesday , King Abdullah of Saudi Arabia called on both groups to respond "to the voice of reason" and "stop this bloodshed".

But as their leaders talked through the night in Mecca, the gunmen back in Gaza fortified their positions in case the talks fail.