(Adds Abu Hilal comment, paragraphs 12-13)

By Nidal al-Mughrabi

GAZA, June 23 (Reuters) - Hamas leader Ismail Haniyeh, prime minister of the Palestinian government dismissed by President Mahmoud Abbas, called for power-sharing talks on Saturday with Fatah rivals routed from the Gaza Strip.

"There will be no dialogue with Hamas," responded Hussein al-Sheikh, a senior Fatah official in the West Bank.

Hamas seized control of Gaza just over a week ago. It faces isolation there, not only from Israel and Western powers, but also from the emergency cabinet Abbas has set up in the occupied West Bank and from Arab states such as Egypt and Jordan.

Abbas on Saturday appointed a commission to investigate how his Fatah forces lost control of the strip to the Islamist group. He also dismissed a senior Gaza commander who "surrendered" rather than fight.

Egyptian President Hosni Mubarak said Hamas's bloody takeover of Gaza amounted to a "coup against legitimacy" that damaged the Palestinian cause.

Israel plans to choke off all but humanitarian and basic supplies to Gaza, home to 1.5 million people, while opening the financial taps to Abbas's emergency government.

NEGOTIATIONS HELD UP

Some aid groups said Abbas's decision to sever contacts with the Hamas leadership in Gaza was holding up negotiations on reopening Gaza's main commercial crossing at Karni.

"Food is being used as a political weapon," a senior Western diplomat involved in the negotiations said.

Hamas is considering hiring private contractors to take over the border crossings because Israel refuses to deal with the Islamist group, an official close to Hamas said.

Israel will begin next week to transfer some $400 million of tax revenues to Abbas's emergency government in the West Bank and will ease some travel restrictions there.

Israeli Prime Minister Ehud Olmert will offer the gestures to Abbas on Monday when the leaders meet at the Egyptian Red Sea resort of Sharm el-Sheikh.

In Gaza, a Fatah official who has broken ranks with Abbas warned Israel not to expect any help from the emergency government which the Palestinian president established a week ago, and said militants in the coastal strip could retaliate.

"More pressure and more closures will explode in (Israel's) faces. The government which is collaborating with the occupation (Israel) will not be able to bring them security," Khaled Abu Hilal said. "Remember that we are ready to do all we can to preserve our dignity and we will race for martyrdom."

HAMAS MILITANT SEIZED

Israel seized a top Hamas militant in the West Bank on Saturday and officials identified him as the founder of the group's armed wing in the territory.

Hamas spokesman Sami Abu Zuhri said the arrest was proof "we are facing a dual conspiracy" in the West Bank, one led by Israel and the other by Abbas's security forces.

Abbas has ruled out any dialogue with Hamas, which he accused of trying to assassinate him. Hamas has denied the allegations.

"The way out of the current situation is launching a Palestinian dialogue without pre-conditions," Haniyeh told Yemeni President Ali Abdullah Saleh by phone.

Haniyeh said the talks should be held "on the basis of no loser and no winner, and on the basis of no harm to anyone, and on the basis of a national unity government", his office said.

Israeli officials say some $400 million in tax revenues will be transferred to Abbas's emergency government in stages, short of more than $700 million the Palestinians say they deserve. Israel says the remainder has been frozen by court order.

U.S. officials have asked that Israel ease restrictions on Palestinian access to the Jordan Valley, as well as remove barriers, checkpoints and roadblocks near major Palestinian population centres, including Hebron, Bethlehem and Nablus.

Israeli defence officials have mainly objected to removing the roadblocks and checkpoints near Nablus, arguing they are needed to prevent militants from criss-crossing the West Bank and infiltrating Israel. (Additional reporting by Haitham Tamimi in Ramallah, Avida Landau in Jerusalem and by Alaa Shahine)

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