DAMASCUS, Nov 11 (Khaled Yacoub Oweis/Reuters) - Rival Palestinian groups Hamas and Fatah failed to strike an agreement to narrow sharp differences on security issues and ended their latest round of talks overnight, officials said on Thursday.

The Hamas-Fatah standoff, which erupted into warfare in 2007, has damaged their declared cause of regaining occupied land, triggering a scramble by outside powers -- Syria, Iran, Washington and Egypt -- to influence Palestinian politics.

The talks were the second since September and were designed to address control of the Palestinian security apparatus, which has been divided between the Gaza Strip -- controlled by the Islamist Hamas -- and the West Bank where Fatah operates.

We have not reached a deal, Fatah official Azzam al-Ahmad, whose more secular group is loyal to US-backed Palestinian Authority President Mahmoud Abbas, told reporters in the Syrian capital Damascus.

Another Palestinian official said the two sides had also failed to agree on a date for a third round of talks, but declined to give details.

The talks started on Tuesday, with the Fatah delegation including senior intelligence official Majid Farah and deputy Hamas leader Moussa Abu Marzouk leading his group's team.

Fatah is effectively against lessening its control of the Palestinian Authority's security apparatus after purging it of Hamas sympathisers.

Hamas says the Palestinian Authority's U.S.-backed intelligence wing, which operates in the occupied West Bank with Israeli permission, cooperates with Israel against Hamas and other groups that believe in military resistance against Israel.

Hamas politburo member Izzat al-Rishq said last week Hamas wanted the establishment of a committee to supervise security agencies in the West Bank and the Gaza Strip, and follow-up on the restructuring and the rebuilding of the security apparatus.

The two sides agreed at the first round of talks in September to help revive Egyptian efforts to narrow divisions, but they have since scaled back positive statements made then about prospects for reconciliation.

The security cooperation talks were originally scheduled for October, but were canceled after Abbas and Syrian President Bashar al-Assad exchanged angry words at an Arab summit over resistance against Israel.

Syria hosts Hamas's leadership in exile, including several members who were expelled from Jordan in 1999.

Hamas has controlled the Gaza Strip since defeating Fatah forces in 2007.

Talks between Israel and Abbas's Palestinian Authority broke down when a 10-month partial Israeli freeze on settlement building in the West Bank expired in September.