Talks between the main Palestinian factions on forming a unity government have broken up without a deal. The negotiations between Hamas and Fatah in Egypt are seen as crucial to advancing Palestinian hopes of eventual statehood.The Islamist Hamas group drove Fatah out of Gaza in a bloody power struggle in 2007 and the two sides have remained divided since. They differ most over the question of how to deal with Israel. Though currently observing a truce Hamas believes in armed struggle to achieve its aims, while Fatah’s leaders favour dialogue with Israel. The groups have agreed on the principle of forming a unity government and holding elections by January 2010. But they disagree on the shape and agenda of a future administration. An Egyptian official said talks would resume next week.