Rival Palestinian groups Hamas and Fatah say they have finally reached reconciliation deal in Cairo

Rival Palestinian groups Hamas and Fatah said Wednesday they had resolved their deep divisions, opening the way for a unity government and national elections.

The deal, which took many officials by surprise, was thrashed out in Egypt and followed a series of secret meetings.

"The two sides signed initial letters on an agreement. All points of differences have been overcome," Taher Al-Nono, the Hamas government spokesman in Gaza, told Reuters. According to Al-Nono, Cairo would shortly invite both sides to a signing ceremony.

For his part, Azzam al-Ahmad, head of the Fatah delegation, told Egypt's state television that there has been a comprehensive and final agreement. The agreement calls for presidential and legislative elections to be held within a year, Ahmad told AFP by telephone in the West Bank political capital of Ramallah.

Egypt's official MENA news agency reported, meanwhile, that the two rival groups have reached an "understanding" in Cairo on setting up a transitional unity government.

The factions "reached a complete understanding after talks on all the points, including the formation of a transitional government with a specific mandate and setting a date for elections," MENA said. Egypt will now call a meeting of all Palestinian factions to sign a reconciliation agreement in Cairo, it added.