Palestinian president Mahmud Abbas on Saturday said dialogue with Hamas on the formation of a national unity government had "returned to zero" after the Islamist movement refused to recognise Israel.
Abbas, returning to the Middle East from New York, where he met with US President George W Bush, criticised "retractions" by Hamas leaders after they had agreed to form a national unity government.
"We had concluded an agreement for the formation of a government of national unity based on several points, among which in particular was to respect all of the agreements reached by the PLO (Palestine Liberation Organisation) and (to respect) the Arab peace initiative," Abbas said.
"We unfortunately returned to zero and we will negotiate again" with Hamas, he said after holding talks in Cairo with Egyptian President Hosni Mubarak.
Hamas had agreed with Abbas earlier this month to form a national unity government, raising hopes the movement may finally agree to Western demands to renounce violence, recognise Israel and abide peace deals.
But on Friday, Hamas insisted a unity government would not recognise Israel and proposed a 10-year truce that was promptly rejected by the Jewish state.
The United States is emphatic that the three conditions must be met before a virtual international blockade on funds to the Palestinian Authority is lifted.