By Mohammed Assadi

RAMALLAH, West Bank, May 15 (Reuters) - Divided and angry, Palestinians mourned Israel's birthday with protests, sirens and black balloons on Thursday as U.S. President George W. Bush feted the Jewish state as "a homeland for the chosen people".

Normally a show of Palestinian unity, ceremonies marking the "Nakba" or catastrophe underscored an internal split between President Mahmoud Abbas, who is trying to negotiate a peace deal with Israel, and Hamas Islamists, who oppose the talks.

In Gaza, where Hamas seized control in June, nearly 1,000 children dressed up as anti-Israel militants, armed with fake guns and mortar launchers.

In the West Bank, Abbas appealed for reconciliation and an end to Israeli settlement building on the 60th anniversary of Israel's birth, which Palestinians mourn as the loss of their own homeland.

"Sixty years have passed ... It's time to end the Nakba for the Palestinian people," Abbas, whose U.S.-backed talks with Israeli Prime Minister Ehud Olmert have shown little sign of progress, said in the West Bank city of Ramallah.

While Abbas urged continuing with talks until an agreement is reached, Hamas's "Nakba" message urged Palestinians to join the "resistance" against Israel and said the president should "abandon the illusions of negotiations".

SIRENS AT NOON

Sirens sounded at noon in West Bank cities, bringing traffic on some streets to a standstill for two minutes.

In Gaza, mass demonstrations were held to protest Israel's blockade of the coastal territory.

Rival television stations of both Hamas and Abbas's Fatah faction aired footage of Palestinians who fled or were expelled from their homes in 1948.

But tensions between the two sides were high in Gaza, where Hamas security forces prevented Fatah loyalists from holding a Nakba rally in the Jabalya refugee camp.

Protests highlighted the plight of Palestinian refugees and their descendants, 4.5 million of whom now live in the West Bank, the Gaza Strip, or further afield, many in grim camps.

In Ramallah, school children walked the flag-lined streets in black t-shirts that read "1948" on the back and "Not for Sale" on the front. Some held old, rusty metal keys of homes their families were expelled from or fled.

Thousands of black balloons, denoting each day since Israel was established on May 15, 1948, were released above the West Bank. Organisers hope they will darken the sky over Jerusalem for Bush, who will mark the Jewish state's founding with a congratulatory speech to parliament.

The speech contains just one reference to Palestinians, and no mention of his hope of sealing an Israeli-Palestinian peace deal before he leaves the White House in January.

"We gather to mark a momentous occasion," Bush will tell the Israeli parliament, according to an advanced text released by the White House. He said Israel's establishment "was the redemption of an ancient promise given to Abraham, Moses, and David -- a homeland for the chosen people in Eretz Yisrael". (Additional reporting by Nidal al-Mughrabi in Gaza, Ali Sawafta in Ramallah and Tabassum Zakaria in Jerusalem; Writing by Adam Entous; Editing by Mark Trevelyan)

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