CAIRO, May 3 (Sami Aboudi/Reuters) - Smaller Palestinian factions signed a reconciliation deal on Tuesday ahead of a formal ceremony this week to celebrate the accord designed to end a four-year rift between the biggest factions, Hamas and Fateh.

Egypt last week brokered the accord between the Islamist Hamas, which runs the Gaza Strip, and the secular Fatah which heads the US-backed Palestinian Authority and controls self-rule areas of the occupied West Bank.

Palestinians see this reconciliation as crucial for their drive to establish an independent state in the territories captured by Israel in the 1967 war. Israel has denounced the deal, saying Fatah must choose to deal with Hamas or Israel.

The accord calls for creating an interim unity government for the West Bank and Gaza Strip instead of the administrations led by Fatah and Hamas which currently run each territory.

Izzat al-Rishq, a Hamas spokesman, said all Palestinian factions and independent Palestinian politicians met in Cairo on Tuesday to discuss the agreement brokered by Egypt last week.

All the factions signed today (Tuesday), and tomorrow we will celebrate the reconciliation under Egyptian patronage and in the presence of (Palestinian President Mahmoud) Abbas and (Hamas leader) Khaled Meshaal, he told Reuters.

Another Palestinian official, who declined to be named, said the smaller factions had inked the deal to show their backing for reconciliation but said the ceremonial signing would take place on Wednesday between the two biggest factions.

Fatah and Hamas will sign with full names tomorrow in a signing ceremony celebrated by all, the official said.
              

ABBAS, MESHAAL TO ATTEND CEREMONY

Abbas, who is also the leader of Fateh, arrived in Cairo on Tuesday and was expected to speak at the ceremony. Meshaal had arrived on Sunday.

Diplomats said foreign and Arab dignitaries, including European Union Foreign Policy chief Catherine Ashton and Turkish Foreign Minister Ahmet Davutoglu, were invited to the ceremony.

But a press officer at the EU mission in Cairo said Ashton was in New York and would not be able to attend.

The interim government, which Palestinian officials said would consist of independent technocrats with no affiliation to either faction, will prepare for parliamentary and presidential elections within a year.

Egypt's state-run MENA news agency said that Hamas and Fateh will release prisoners held by each side and start talks on setting up the new government after the ceremony.

Egypt has said it will help oversee the implementation of the accord.

Hamas, which seized the Gaza Strip from Abbas's Fateh movement in 2007, calls for Israel's destruction in its founding charter although it has offered a long-term truce in return for Palestinian statehood.

Israel refuses to negotiate with Hamas, and the United States and the European Union also shun the group over its refusal to renounce violence, recognize Israel and accept existing interim Israeli-Palestinian peace accords.

(Additional reporting by Nidal al-Mughrabi in Gaza; editing by Ralph Boulton)