By Yusri Mohamed

ISMAILIA, Egypt, July 19 (Reuters) - Egypt opened shelters on Thursday to house hundreds of Palestinians stranded at the closed border with the Gaza Strip for fear that some could resort to sleeping on the streets, an Egyptian official said.

Border guards and police patrolling the Egyptian border were put on alert over concern that Palestinians in Gaza would blow holes in a border wall to allow those stranded to return home.

The Rafah crossing point into Gaza has been largely shut since June 9, shortly before Hamas Islamists routed Palestinian President Mahmoud Abbas's Fatah movement and took control of the territory.

The Egyptian Red Crescent estimates that roughly 5,000 Palestinians are stranded in dusty Egyptian towns in north Sinai. Many of those have been living in cramped, low-budget hotel rooms or sleeping on mats on the floor in bare concrete shelters as their money runs out.

Ahmed Abdel Hamid, the governor of northern Sinai, told Reuters that the government had set up seven shelters in schools, military camps and a youth shelter in el-Arish that could house 900 Palestinians.

"These centres have opened now ... They were opened after some Palestinians ran out of money to guard against them sleeping in the streets," Abdel Hamid said.

He said meals would be served on a daily basis to Palestinians living in the shelters, but the authorities had so far only managed to raise part of the necessary funds.

Local public hospitals had also been instructed to treat stranded Palestinians for free, Abdel Hamid said. He added that more schools could be used to house Palestinians.

Egyptian officials say that most of the stranded Palestinians are Gazans who sought medical treatment abroad, although some were holidaymakers.

Security sources said border police had been placed on alert after dozens of protesters on the Palestinian side of the Rafah crossing demanded their countrymen be allowed to enter Gaza. One source said the protesters had threatened to breach the wall.

Egyptian authorities deployed hundreds of additional central security forces to reinforce the border police, the source said.

Rafah residents said Egyptian police had asked them to shut their shops near the crossing, although they were allowed to reopen them. Police sealed off roads leading to the border.

A security source said Egyptian police checkpoints were performing identity checks and turning Palestinians away from Rafah.

Although Palestinian and Egyptian officials technically control the crossing, it can be blocked by Israel.

Proposals to allow stranded Palestinians to cross into Gaza through Israel's Kerem Shalom crossing have run into obstacles. Some Palestinian officials object to using that crossing because it is subject to Israeli controls.

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