Ministers from the Hamas-led government and aides to Palestinian Authority president Mahmud Abbas held a joint meeting but without agreeing on how to resolve a deepening fiscal crisis.
A source in Abbas's office said that differences remained between the two sides on the financial issue and on the responsibilities of the government.
‘The participants did not agree on any of the points and so there will not be a follow-up meeting tonight between Haniya and Abbas,’ he said, asking not to be named.
Abbas and Hamas prime minister Ismail Haniya had agreed to establish the forum at late-night talks on Saturday.
Foreign minister Mahmud al-Zahar, interior minister Said Siam and cabinet secretary general Mohammed Awad attended the meeting on behalf of the Hamas administration, according to government spokesman Ghazi Hamad.
Sources in Abbas's office meanwhile said the president's chief aide Rafiq al-Husseini, former deputy premier Nabil Shaath, former parliament speaker Rawhi Fattuh and head of the opposition Fatah faction in the legislative council Azzam al-Ahmed took part in the talks in Gaza City.
The Palestinian Authority has been mired in a financial crisis since Hamas came to power in late March with the European Union and United States both freezing aid payments over the Islamists' failure to renounce violence or recognise Israel's right to exist.
Although some Arab states have pledged to fill the shortfall, the funds have yet to arrive with banks understood to be under pressure from the United States not to handle any cash.
‘We have the money but the problem is how to get the money in,’ Haniya told reporters after Saturday night's meeting with Abbas.
Zahar, who has just returned from a tour of Arab states designed to whip up financial support, insisted that donors were prepared to match their pledges with hard cash.
‘I can tell you that the Arab countries which have promised me that they would supply funds will supply funds,’ Zahar told reporters.
Zahar also expressed confidence that the common European front to boycott Hamas was unsustainable and claimed that he had met with one counterpart from the continent on his travels.
‘I met with one foreign minister and I had numerous contacts with European parties,’ he added, while refusing to identify the minister in question.
Even though the European Union continues to regard Hamas as a terrorist organisation, the consensus on how to deal with the Islamists is less than watertight, as illustrated by Sweden's decision to grant a visa to refugee affairs minister Atef Edwane to attend a weekend conference.
Zahar said that Washington was trying to pressure EU countries to maintain their boycott of the movement which entered government in March after winning parliamentary elections by a landslide.
‘The aim of these meetings is to short-circuit this American pressure,’ he said.
‘With time, which we don't think will be long, the European position will fall apart,’ he added.
The 25-nation European Union used to the biggest donor of aid to the Palestinians, donating about 600 million dollars a year.
Its decision to suspend aid payments exacerbated an already acute financial crisis for the Palestinian Authority which has been unable to pay salaries for the last two months.