(Adds rallies in Gaza, Hebron paragraph 9)

By Ali Sawafta

RAMALLAH, West Bank, March 26 (Reuters) - Palestinian President Mahmoud Abbas's Fatah faction on Wednesday ruled out talks with Hamas unless the Islamist group first cedes control of Gaza, casting doubt on a Yemen-sponsored reconciliation push.

Fatah and Hamas, which seized control of the coastal enclave last June, agreed in Yemen this week to revive direct talks after months of hostilities to "return the Palestinian situation to what it was before the Gaza incidents."

But an apparent dispute quickly broke out. Hamas has said talks will start on April 5 while Abbas's office insisted the Islamist group must first relinquish control of the Gaza Strip.

"We are ready to open a new chapter but the Palestinian condition remains unchanged, and that is a complete and a total reversal of the coup," Abbas's media adviser Nabil Amr told reporters in the West Bank city of Ramallah.

"This is the final position of the Palestinian National Authority, of the Palestine Liberation Organisation and of Fatah."

After the Gaza takeover, Abbas sacked a Hamas-led unity government, arrested some supporters of the group and pursed U.S.-backed peace talks with Israel -- a move Hamas opposes. Hamas has repeatedly called for reconciliation talks with Fatah but has rejected Abbas's condition that it first give up control of the Gaza Strip, where 1.5 million Palestinians live.

This week's dispute was certain to increase political tensions between the two groups and weaken hopes by ordinary Palestinians for a deal to end hostilities.

About 7,000 Palestinians in Gaza and several hundred in the West Bank city of Hebron joined rallies for unity. In Hebron they waved Hamas, Fatah and Palestinian flags and held hands, while in Gaza crowds chanted "Yes for reconciliation".

Hamas official Sami Abu Zuhri said Amr's comments on Wednesday effectively "wiped out" the Yemeni initiative and reflected the positions of Israel and the United States.

Abu Zuhri said the "Yemeni initiative stated clearly it was an initiative for dialogue between Hamas and Fatah" and not a list of items that must be implemented immediately.

But Azzam Al-Ahmad, a senior Fatah leader, who signed the Yemeni proposal with Hamas, said his group had rejected efforts by Hamas to change the plan.

"We will sit down with Hamas after they end the coup and after they stop saying that there is a government headed by Haniyeh," he said, referring to Hamas's leader in Gaza, Ismail Haniyeh. (Additional reporting by Nidal al-Mughrabi and Haitham Tamimi; Writing by Nidal al-Mughrabi and Rebecca Harrison; Editing by Keith Weir)

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