By Nidal al-Mughrabi

RAFAH, Gaza Strip, Feb 1 (Reuters) - Hamas used a bulldozer to widen a breach in the Gaza-Egypt border on Friday so trucks could pass out of the Israeli-blockaded Palestinian territory despite Egypt's efforts to seal the crossing, witnesses said.

An armed Hamas militant clung on to the outside of the yellow bulldozer's cab as the driver went about his work, and a number of other armed men close by provided additional cover.

Local Palestinian residents and the waiting truck drivers cheered "crush the barrier" and shouted out "Hamas" as the bulldozer cleared a path wide enough to allow trucks to pass in either direction.

The truck drivers then hurried back to their vehicles to cross the border in the fading afternoon light while Egyptian forces, who earlier this week closed two other crossings and narrowed the third, backed away and watched from a distance.

The development came the day after Egypt began talks in Cairo with Hamas leader Khaled Meshaal on passage through the Gaza border. No agreement was reached and the discussions continued on Friday.

Egypt called in police reinforcements on Thursday to seal gaps made last week by Hamas, whose militants blasted open the border to let hundreds of thousands of Gazans into Egypt to hunt for food and supplies in defiance of an Israeli-led blockade.

A senior Egyptian security official said Egypt had given orders to security men to close the border in phases in order to minimise friction with Palestinians.

But they backed off on Friday after Hamas militants threatened to blow another hole in the wall, the Palestinian witnesses added.

FIRST BREACH

Since the first breach was made, Egyptian forces have used cement and sandbags to seal gaps in the border and to reinforce their own positions.

Palestinian President Mahmoud Abbas has rejected Hamas demands it control the border and won U.S., European and Arab backing to take control of the Rafah crossing without Hamas.

But it is unclear how Abbas, the Fatah leader whose authority is now limited to the Israeli-occupied West Bank, would be able to exert control over Rafah given opposition from Hamas, whose forces control the Gaza Strip.

Hamas leader Ismail Haniyeh said in a newspaper interview on Friday that Abbas would be to blame for any failure of the Cairo talks and that Hamas had ideas on how to run the Rafah crossing.

Hamas spokesman Sami Abu Zuhri said in a speech in Gaza on Friday that the Islamist movement would not agree a "return to the cage of siege and the 2005 passages agreement" governing the Rafah crossing.

"We want a free Palestinian-Egyptian crossing ... regardless of the sacrifices, we will not accept the occupation's (Israel's) control of the crossing," he said.

Hamas took control of the Gaza Strip last June after ousting Abbas's Fatah forces in a brief but bloody civil war in the coastal territory which is home to some 1.5 million inhabitants. (Writing by Ori Lewis in Jerusalem and Aziz El-Kaissouni in Cairo; Editing by Jon Boyle)

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