RAMALLAH, West Bank, Aug 21 (Reuters) - A resumption of Middle East peace talks inspires little hope among Palestinians who say the prospect of an independent Palestinian state alongside Israel seems no more than a dream. There has been a lot of talk of peace, but we have seen no results. We no longer have hope, said 30-year old Luay Kabbah, who was still at school when Palestinian and Israeli leaders first began talking peace nearly two decades ago.

His despondency reflects deep pessimism among Palestinians, mirrored in Israel, on the prospects for a new round of U.S.-mediated peace talks that are due to begin in September.

The talks are the latest chapter in a peace process which, interrupted by several years of violence earlier this decade, has given Palestinians limited self-rule but no state on lands occupied by Israel since a 1967 Middle East war.

Today, the idea of that state emerging in the West Bank, the Gaza Strip and East Jerusalem -- the leadership's stated goal -- seems almost far-fetched to many Palestinians.

They say their hopes have been eroded by Israeli policies, the United States' failure to force Israel into concessions and the failings of their own leaders, who have grown ever weaker and more divided since Yasser Arafat's death in 2004.

Rival Palestinian governments have emerged in Gaza and the West Bank, creating a divide that has complicated what was already one of the world's most intractable conflicts.

For now, avoiding a deterioration in the status quo is the best to be hoped for, said Ahmad Aweidah, head of the Palestinian stock exchange, set up when hopes of peace were high in the 1990s.

Peace process? What peace process? That's so nineties. After 18 years, don't they feel silly? he said.

There are only two scenarios. The optimistic one is more of the same. The pessimistic one is it's going to get worse.

The United States had made reviving Israeli-Palestinian negotiations one of its priorities. U.S. Secretary of State Hillary Clinton, speaking on Friday, said there had been difficulties in the past and there would be difficulties ahead.

Clinton said Israeli Prime Minister Benjamin Netanyahu and Abbas will meet President Barack Obama on Sept. 1, with direct negotiations resuming the following day. Egyptian President Hosni Mubarak and Jordan's King Abdullah have also accepted invitations to attend the launch.


FAILURE FROM THE OUTSET

The borders of the Palestinian state, the fate of Jewish settlements built on occupied land and the future of Jerusalem are among the tough issues that the negotiators will face and which past talks have failed to resolve.

Palestinian President Mahmoud Abbas, his credibility damaged by the failure of past talks, had sought a clear agenda for the talks as well as a complete halt to Jewish settlement building before agreeing to more negotiations.

His Palestinian critics said he had secured neither from the United States, which echoed Israel's call for negotiations to start without preconditions.

Abbas, also known as Abu Mazen, has said he has faced unprecedented international pressure to negotiate with Israeli Prime Minister Benjamin Netanyahu.

It's a failure from the outset, said Saliba Totah, 64, reading the news with friends on a Ramallah street. Negotiations in this way cannot lead to a state, he said.

We have no hope. Netanyahu will not give a thing, not in a year, not in years, said Jamal Khamis, a metal foundry worker in Gaza. Abu Mazen was forced to agree and therefore the talks will never succeed, added the 42-year old.

Zakaria al Qaq, a political commentator, said: What he has opted for is the option of a crippled, helpless politician.

Abbas's negotiation strategy has long been condemned by the Hamas Islamist group which seized control of the Gaza Strip from him in 2007 and is deeply hostile to Israel. This time, a resumption of peace talks has faced opposition from other sections of Palestinian society.

We are the audience in a theatre, said Samir Hulileh, chief executive officer of Palestine Development and Investment Ltd (PADICO), a holding company set up at the start of the peace process with the aim of building a Palestinian economy.

We have memorised the play so many times, it is repeated in different forms, and sometimes with different faces, but it's the same, he said. We know the final outcome, he said. We don't feel hope coming out of it. (Additional reporting by Ali Sawafta and Nidal al-Mughrabi in Gaza; Editing by Angus MacSwan)