RAMALLAH, West Bank, July 4 (Reuters) - Palestinian security forces loyal to President Mahmoud Abbas have seized large cash sums and West Bank homes from men they accuse of plotting to kill government officials, a security source said on Saturday.

The official, who could not be named, said evidence would only be produced "at a later date" but added that over the past few weeks men known to have connections to Islamist Hamas have been arrested at a number of locations in the West Bank.

"Security forces have seized some $8.5 million in cash since March until now and have arrested a number of people who have recently purchased homes adjacent to government and military installations, mainly in the city of Nablus. We will produce the evidence at the appropriate time," the official told Reuters.

He said investigators suspected that the location of the homes allowed operatives loyal to Hamas to observe movements by government officials and security forces.

The official said forces had also seized uniforms used by various Palestinian security forces.

"Hamas's intention is to establish a parallel security services in the West Bank," the source said.

There was no immediate comment from Hamas.

Last week, Tayyeb Abdel Rahim, a top aide to Abbas, said about 10 Hamas loyalists were arrested on suspicion of planning attacks against Palestinian officials and institutions in the West Bank. Hamas said the accusations were false.

Saturday's accusations are the latest in series of claims and counter-claims by the rival factions, both of whom seek dominate the Palestinian political scene.

Tension between Islamist Hamas and Western-backed Abbas's secular Fatah faction has increased since Hamas took control of the Gaza Strip in a brief but bloody civil war two years ago. Fatah still holds sway in the West Bank.

Both sides also accuse each other of arresting men from the other faction and of torturing detainees.

For months, Fatah and Hamas have tried to agree a power-sharing deal in Egyptian-brokered reconciliation talks but earlier this week they again failed to clinch a deal, missing a July 7 deadline for an agreement.

The Egyptian mediators have now set July 28 as the target date for a deal.

Abbas wants to reinstate his authority in the Gaza Strip and Hamas hopes a deal can persuade the West to ease restrictions imposed on it over its refusal to recognise Israel, renounce violence and accept Israeli-Palestinian interim peace accords. (Reporting by Mohammed Assadi in Ramallah, writing by Ori Lewis; editing by Philippa Fletcher)

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