(Changes year to 2006 in paragraph 9)

By Wafa Amr

RAMALLAH, West Bank, Jan 22 (Reuters) - President Mahmoud Abbas, politically weakened by the loss of the Gaza Strip to Hamas Islamists, is waging a two-front battle in his quest for a deal with Israel on Palestinian statehood.

His efforts, spurred by the United States, have been complicated by rocket attacks on Israel by militants in the Gaza Strip and an Israeli closure of the territory's borders that have raised fears of a humanitarian crisis.

"He is fighting one battle to end the Palestinian split caused by Hamas' coup in Gaza, in order to continue his path to achieve Palestinian national goals embodied in Palestinian independence," said Hassan Asfour, a former Palestinian negotiator, using Abbas's term for the Gaza takeover.

The other obstacle he faces, Asfour said, is Israel's more narrow concept of the type of agreement it hopes to reach with Abbas before U.S. President George W. Bush leaves office in January 2009. Abbas seeks a full peace treaty and wants to declare a Palestinian state by the end of this year.

Israeli Prime Minister Ehud Olmert however, wants a general "framework" accord in that timeframe that would not end with a statehood declaration but would outline how key issues such as Jerusalem, Jewish settlements, Palestinian refugees and borders, would be resolved.

Israel and the Palestinians opened their first serious peace talks in seven years last week, with Bush urging those core issues be tackled.

But like Abbas, whose Fatah faction lost control of the Gaza Strip to Hamas in fighting in June, Olmert also has been weakened by domestic problems.

The Israeli leader could face new calls to resign after a government-appointed commission issues its final report on January 30 on a 2006 war against Lebanon's Hezbollah guerrillas, a campaign many Israelis see as a failure.

Abbas has conditioned renewed dialogue with Hamas on its retraction of all measures taken since it seized Gaza, and the group's acceptance of early presidential and parliamentary elections.

Hamas has rejected his conditional offer for dialogue.

SETTLEMENTS

Abbas has recently come under intense domestic pressure to halt talks with Israel as long as it continues expanding Jewish settlements in occupied territory.

The pressure has grown since Israel stepped up a military campaign in the Gaza Strip against militants who frequently fire rockets at its towns near the frontier.

Olmert has ordered a de-facto halt to new construction in settlements in the West Bank, but he has not called off plans to build hundreds of new homes in an area near Jerusalem known to Israelis as Har Homa and to Palestinians as Jabal Abu Ghneim.

"The only path (Abbas) sees is negotiations. I asked him, 'what if negotiations fail'? He said, 'more negotiations -- the other option is destructive,'" Palestinian analyst Hani al-Masri said.

Another Palestinian analyst, Ali Jarbawi, said there appeared to be no solution in sight to Abbas's standoff with Hamas.

"It's a sore point," Jarbawi said.

Nonetheless, opinion polls show the majority of Palestinians trust Abbas can resolve their problems.

"If Abbas turns his back and leaves, the West and Israel will have a very big problem," Ghassan Khatib, a former Palestinian planning minister, told Reuters. "But he's not using his leverage in a sufficient way to improve his position." (Editing by Richard Balmforth)

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