Israel, which in 1967 captured the West Bank and Gaza Strip, where the Palestinians seek statehood, decried the deal as a blow to prospects for peace.

"We announce to Palestinians that we turn forever the black page of division," Palestinian President Mahmoud Abbas, Fatah's leader, said in his opening address.

Israeli Prime Minister Benjamin Netanyahu said during a visit to London: "What happened today in Cairo is a tremendous blow to peace and a great victory for terrorism."

Hamas, whose founding charter calls for Israel's destruction, seized the Gaza Strip from Fatah forces in a brief Palestinian civil war in 2007. It has opposed Abbas's quest for a negotiated peace with the Jewish state.

There were U.S. reservations about the Cairo ceremony. "It's important now that Palestinians ensure implementation of that agreement in a way that advances the prospects of peace rather than undermines them," State Department spokesman Mark Toner said.

"We'll wait and see what this looks like in real and practical terms... We still don't know what, if any changes, there will be at the governmental level," he said.

Toner said the United States continued to believe that Hamas must recognize Israel's right to exist, reject violence and abide by interim peace agreements if it wants to play a meaningful role in the political process.

He said the United States would look at the formation of any new Palestinian government before taking steps on future aid.