DAMASCUS (AFP) – Rival Palestinian factions will hold further talks within a fortnight on a government of national unity after a meeting between Palestinian president Mahmud Abbas and exiled Hamas supremo Khaled Meshaal failed to achieve a breakthrough.

The two leaders told a media conference after they met for three hours in Damascus on Sunday night they had made “considerable progress” but that differences remained.

A joint statement said Fatah and Hamas had agreed “to continue and resume negotiations on a government of national unity within the coming two weeks.”

Sunday’s talks had been touted as key to resolving the long-running feud between Abbas’s Fatah party and the ruling Islamist Hamas which erupted into firefights and tit-for-tat violence in December that killed 30 people.

“We reiterate that dialogue is the only way to resolve our political differences,” Meshaal told the media conference, adding that it was wrong to speak of a “power struggle” within the Palestinian Authority.

“There are still points of divergence but the dialogue will continue in Gaza … or outside to arrive at the formation of a government of national unity,” he said.

Both sides in the joint statement condemned the spilling of Palestinian blood and agreed to avoid provocation through “a war of words”.

Sunday’s meeting had been in doubt, with Mussa Abu Marzuk, a senior Hamas official based in Damascus, earlier saying it would not take place “because there is no understanding on a political formula proposed to the two sides.”

The Western-backed Abbas arrived in Damascus on Saturday to try to hammer out a resolution to the political crisis and has held talks with President Bashar al-Assad and Vice President Faruq al-Shara, as well as leaders of militant groups in the capital.

Meshaal, one of Israel’s most wanted men who lives in exile in Syria, is regarded as key to any deal.

Fatah and Hamas have tried for months to agree on a unity government in the hope of ending a boycott and aid freeze by the United States and the European Union that has crippled the Palestinian economy.

Washington and the EU consider Hamas to be a terrorist group and suspended direct financial aid to the Palestinians after it took power in March because the Islamists refuse to renounce violence or recognise Israel’s right to exist.

Mustafa Barghuti, an independent Palestinian MP who was in Damascus for the talks, said some issues had been resolved but key questions remained outstanding.

“They’ve resolved many problems. There is still one problem — the political program for the government,” he said on his return to Ramallah.

He said Abbas wants a unity government to “commit to” all agreements with Israel, while Hamas is insisting it simply “respect” past agreements.

Last month’s clashes between the rival factions erupted after Abbas called for early elections as a way of resolving the standoff with Hamas, which vehemently rejected the move as an attempted coup and warned it could set off civil war.

On Saturday, Syria affirmed its commitment to Palestinian unity when Assad met Abbas, whose long-dominant Fatah party was dramatically trounced by Hamas in January 2006 elections.

It was the first meeting between Abbas and Assad since 2005, while Abbas has not seen Meshaal since Hamas’s shock election win.

On Friday, Abbas received a boost when Israel released 100 million dollars in tax revenue collected on behalf of the Palestinians that had been withheld since Hamas took power.

The move, which involves only part of the estimated 600 million dollars in Palestinian customs duties withheld by Israel, followed a December summit between Abbas and Israeli Prime Minister Ehud Olmert.