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GAZA, Oct 10 (Reuters) - Hamas said on Wednesday it would hold reconciliation talks with the Fatah faction of Palestinian President Mahmoud Abbas and hinted it might be ready to give up control of the Gaza Strip, which it seized in June.

"There is a serious movement in the realm of Palestinian dialogue and we have agreed to hold a dialogue with Fatah in one of the Arab capitals," said Ismail Haniyeh, Hamas prime minister in the former government that Abbas declared void.

"Our administration in Gaza is temporary," Haniyeh said in a bulletin posted on a pro-Hamas Web site.

The Western-backed Abbas, who is pursuing a peace deal with Israel, has ruled out re-engagement with Hamas unless the Islamist group submits to his authority and ends its control of Gaza.

A Fatah official in Gaza said he could not immediately confirm Haniyeh's statement that new talks would take place.

Haniyeh said the talks would be held after Eid al-Fitr, the Muslim festival that ends the holy month of Ramadan and falls on Friday or Saturday.

An official involved in Hamas-Fatah mediation but affiliated with neither group confirmed that there would be a meeting as early as next week, and said Cairo was the likely venue.

Israel, whose prime minister, Ehud Olmert, will attend a U.S.-sponsored conference on Palestinian statehood with Abbas next month, opposes reconciliation between Fatah and Hamas unless the latter abandons its hostility to the Jewish state.

"Israel believes that Hamas should be kept out of the game as it is a consistent detriment to any chance for progress between Israel and the Palestinians," Olmert spokesman David Baker said in Jerusalem.

"Hamas is a terrorist organisation ... It should be distanced from the Israeli-Palestinian dialogue."

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