Abbas appeals for end to foreign aid freeze

Nine people were wounded in a second day of gun battles in the Gaza Strip between Hamas, which rejects Abbas's vision of a negotiated peace with Israel, and his Fatah faction.

The internal violence is fuelled by a power struggle between Abbas and Prime Minister Ismail Haniyeh of Hamas over control of security forces following the January 25 election won by the Islamic militant group and has raised fears of civil war.

In a letter to the "Quartet" of peace brokers that planned to meet later in the day in New York, Abbas appealed for funds to pay salaries, overdue since March, to 165,000 workers employed by the Palestinian Authority.

"A quarter of the Palestinians rely on the public sector salaries, and failure to pay these salaries could jeopardize the very foundation of the institutions of the Palestinian Authority and the future Palestinian state," Abbas wrote in the letter obtained by Reuters.

"Besides the potential humanitarian crisis resulting from the general deterioration of the economic situation, inability to pay salaries might have deep destabilizing political and security implications," Abbas said.

Local, regional and international banks, fearful of facing US anti-terrorism sanctions and lawsuits, have refused to deal with the Authority, creating a liquidity crisis.