The deal signed in Doha by rival Palestinian movements Fatah and Hamas has moved the two sides closer to reconciliation but challenges remain, officials and experts warn.

Palestinian President Mahmoud Abbas, who also heads Fatah, and Hamas chief Khaled Meshaal signed an accord on Monday placing Abbas at the head of an interim consensus government to supervise the run-up to elections later this year.

Palestinian President Mahmoud Abbas will have chosen to "abandon the path of peace" if he implements a reconciliation deal with Hamas signed on Monday, Israeli Prime Minister Benjamin Netanyahu warned.

He issued the warning shortly after Abbas and Hamas chief Khaled Meshaal inked the deal in Qatar that will see the Palestinian president serve as the head of an interim consensus government in the run-up to elections this year.

Palestinian President Mahmoud Abbas is to head an interim consensus government under a deal signed with Hamas on Monday, ending a long-running disagreement over the post that stalled Palestinian reconciliation.

The accord signed in Qatar was welcomed by officials from both rival Palestinian movements Hamas and Fatah, but Israel warned Abbas to choose between reconciliation with Hamas and making peace with the Jewish state.

Rival Palestinian factions Hamas and Fatah agreed at a meeting in the Qatari capital on Sunday that presidential and legislative elections must be held "quickly," a top official told Agence France Presse.

Palestinian President Mahmoud Abbas and Hamas chief Khaled Meshaal met to explore the formation of an interim Palestinian government to oversee the preparations for the polls and discuss the implementation of a reconciliation deal.

Palestinian President Mahmoud Abbas and Hamas chief Khaled Meshaal began talks in the Qatari capital Sunday on the formation of an interim Palestinian government and staging of elections, an official said.

The meeting was to explore the formation of "an interim government composed of independents to oversee the preparations for upcoming presidential and legislative elections," the Palestinian official told AFP on condition of anonymity.

Palestinian president Mahmoud Abbas and Hamas chief Khaled Meshaal will meet on Sunday in Qatar, Fatah party spokesman Azzam al-Ahmed told Agence France Presse on Friday.

Abbas and Meshaal "will discuss forming a government and political questions after the failure of talks" with Israel, Ahmed said.

U.N. Secretary General Ban Ki-moon said time is running out for a settlement but he is not giving up, after Israeli and Palestinian leaders rejected a return to direct negotiations.

"Basically I am not disappointed, it is expected", Ban said late Thursday at the end of a three day trip to Jordan, Israel and the Palestinian territories where he got little joy from political leaders and shoes hurled at him by protesters in Gaza.

U.N. chief Ban Ki-moon, meeting officials in Jerusalem on Wednesday, called on Israel to refrain from settlement activity and offer the Palestinians a "goodwill gesture" to help kickstart peace talks.

But he appeared to be rebuffed by Israeli Prime Minister Benjamin Netanyahu, who said he considered the issue of Israel's settlements in the West Bank and east Jerusalem something to be discussed during negotiations, not before.

Hamas leader Khaled Meshaal, who survived a 1997 Israeli assassination bid, has confirmed he wants to step down after eight years in post, the Islamist movement said on Saturday.

"Political bureau chief Khaled Meshaal has notified Hamas's consultative council that he does not wish to be a candidate for the movement's future leadership," a statement said.

Russian President Dmitry Medvedev held talks Friday with Palestinian president Mahmoud Abbas focused on efforts to kick start stalled peace negotiations with Israel.

Abbas told Medvedev in opening remarks at the Russian president's suburban Moscow residence that the Palestinians "will always draw upon your advice and the favorable approaches proposed by the Russian Federation."