Palestinians began voting in municipal elections that have shaped up as a face-off between President Mahmoud Abbas' Fatah movement and Hamas.

More than 2500 candidates were vying for seats on 84 municipal councils across the Israeli-occupied West Bank and Gaza Strip in what could be a test of sentiment over the halting pace of political and security reforms pledged by Abbas.

"I think this election is a sort of referendum on Abu Mazen's policies," voter Amal Salahat said in the West Bank town of Bethlehem at the 7am (0400 GMT) start to polling, referring to Abbas by his popular nickname.

The vote will shed light on prospects for Fatah and its main rival, Hamas, in a July parliamentary election that Abbas counts on to bolster his mandate for peace negotiations with Israel.

Ceasefire

Balloting proceeded against the backdrop of a fragile ceasefire with Israel engineered by Abbas and seen as crucial by US-led mediators to reviving a "road map" peace process towards Palestinian statehood in the West Bank and Gaza.

But tensions flared anew on Wednesday when Israeli troops shot dead two teenage Palestinian protesters and the Israeli government indefinitely suspended promised military pullbacks in the West Bank, citing Abbas' slowness to disarm fighters.

Analysts expected neck-and-neck races for the municipal councils as Fatah seeks to recover from a thrashing by Hamas in a January round of voting in Gaza.

Hamas, with street credibility based on its fight against Israel, piety and charitable services, also made a strong showing in elections for some West Bank town councils a month earlier, although Fatah ultimately won more seats.

Festive atmosphere

Polling in Gaza got under way in a festive air as flag-waving activists for various factions erected tents and greeted voters flocking early to ballot stations.

Hamas supporters sported green scarves while backers of the smaller leftist group, the Popular Front for the Liberation of Palestine, were garbed in red.

Hamas was running on the slogan "partners in blood, partners in decision-making". Some voters said they wanted more power-sharing after decades of Fatah domination.

"I prefer that two factions rather than one be in charge for the sake of balance. People want the new council to end corruption and get rid of unqualified officials," said Khalil al-Ashqar, 51, as he voted in the Gaza town of Beit Lahiya.

Fatah slipping

A recent poll showed backing for Fatah slipped to 36% in March from 40% late last year, extending a downward trend, while Hamas support rose to 25% from 18%.

But 75% of Palestinians were satisfied with steps Abbas has taken to revive a Middle East peace process frozen since 2000, and 62% thought he was serious about fighting corruption, the poll showed.

Abbas, who took office in January, last month ordered a major shake-up of security forces that purged many loyalists of late president Yasser Arafat. But there have been little tangible results.

Fatah also stepped up campaigning to counter gains by Hamas, particularly in the Gaza border town of Rafah - the largest municipality involved in Thursday's vote and a resistance stronghold where Hamas commands strong support.

PHOTO CAPTION

Candidates of Islamic group Hamas smile as they arrive at a ballot centre in Beit Lahiya town, northern Gaza Strip, May 05, 2005. (REUTERS)