GAZA, Aug 8 (Nidal al-MughrabiReuters) - Stranded at home and abroad, short of fuel and worried about going hungry, this is not what Gazans expected when Islamist leader Mohammed Mursi was elected president of Egypt in June.

Egypt closed their only passenger crossing into the Gaza Strip and has moved to seal myriad smuggling tunnels connecting the two territories after unidentified militants killed 16 Egyptian policemen in neighboring Sinai on Sunday.

Gaza's Islamist rulers Hamas have ruled out suggestions in the Egyptian media that Palestinian gunmen took part in the Sinai massacre, and have criticized Cairo for imposing collective punishment on the impoverished coastal enclave.

But with Egypt showing no sign of relenting, thousands of ordinary Palestinians have found themselves stranded during the Muslim holy month of Ramadan, while traders warn of shortages if the tunnels stay stoppered.

We had high hopes of being able to travel more freely and we actually noticed an improvement in treatment when we crossed into Egypt, said Tareq Al-Husary, 32, a painter from Gaza who is on a pilgrimage to Saudi Arabia with his sick mother. Now we are marooned out of Gaza, he said, speaking by telephone.

Home to 1.7 million, Gaza has been under tight embargo since Hamas took control in 2007. Hamas is deeply hostile to Israel, and former Egyptian leader Hosni Mubarak helped impose the embargo to peg back the Islamist allies of his domestic foes.

Since Mubarak's downfall last year, Egypt eased restrictions on the passage of travelers through the Rafah crossing -- the only window on the world for the vast majority of Gazans, with Israel refusing exit visas for all but exceptional cases.

The abrupt closure of Rafah, which normally sees some 800 people a day leave for Egypt and beyond, left many visiting Palestinians fearful for their overseas jobs, while others worried their visas might expire before they could be used.

I still hope to be able to make it back to Dubai before August 15th to catch my job, said Heyam Al-Kurdi, who teaches in Dubai and came to Gaza for the wedding of her daughter.

EYEING THE TUNNELS

The shutdown at Rafah has so far prevented 3,000 Gazans from heading to Saudi Arabia for umrah, the minor pilgrimage believed to bring greater merit if carried out during Ramadan. That has left them and their travel agents facing losses of some $4 million for pre-paid accommodation, transport and visa fees.

The closure of the crossing is a disaster for tourism companies, said Eid Hnaif, who works for a Gazan travel firm.

Anxious to show how seriously it took the Sinai killings, Hamas leaders ordered the closure of the smuggling tunnels on Sunday to prevent any of those involved from sneaking into Gaza.

Egypt has long turned a blind eye to the illicit, underground trade, so news on Tuesday that it had deployed heavy machinery to destroy the tunnels, which bring in everything from food to fuel and building materials, caused deep concern.

Palestinians said so far, the shafts to just a few secondary tunnels had been put out of action. However, Abu Awni, a tunnel owner, said Egyptian officials were also trying to find out what went through the main tunnels and had deployed four or five soldiers to various entrance points.

Although Israel has relaxed its trade embargo, introduced to prevent arms or weapons-making equipment to militants, many Gazans prefer to buy cheaper goods smuggled from Egypt.

Eighty percent of food materials in the markets of Gaza come from Egypt. What comes from Israel is not enough at all, said Abu Awni, whose 40 employees were idling at home.

Long lines built at petrol stations across Gaza on Monday as news broke that the tunnels were blocked. Two days later some pumps had already run dry, even though Palestinians said at least two fuel pipes to Egypt were still functioning.

But Abu Awni predicted that the Egyptians would not be able to close the tunnels, believed to number some 1,000, for long.

Unless they create other crossings for trade, we will open five tunnels for each tunnel they close. They can not just leave our people to starve, he said. (Editing by Crispian Balmer and Myra MacDonald)