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RAMALLAH, West Bank, June 9: Palestinian President Mahmoud Abbas's forces and Hamas rivals are expanding their arsenals as a power struggle intensifies, increasing the risk that a showdown could turn bloody, security sources and diplomats said.

New weapons and equipment can be seen on the streets of Gaza and the West Bank, while prices for black market guns and ammunition have soared in a growing arms race despite pledges by both sides to prevent civil war.

''These kinds of preparations have the ability to spin out of control and could produce exactly what they're trying to prevent,'' said Mouin Rabbani, senior Middle East analyst for the International Crisis Group.

Palestinian security consultant Yaser Dajani, who sees the build-up as sabre-rattling rather than a prelude to a full-scale conflict, said: ''It's like flexing your muscles.'' Tension has grown since Abbas threatened to call a referendum on a manifesto for statehood that implicitly recognises Israel if the Hamas-led government persists in rejecting it. Rival forces have clashed sporadically in Gaza.

Western powers want to ensure that Abbas emerges victorious in any power struggle with Hamas, which is formally committed to destroying Israel rather than creating a state alongside it.

US HELP With US encouragement, Israel has agreed to let Egypt and Jordan supply Abbas's presidential guard with small arms and ammunition. Spain has promised to send a fleet of four-wheel-drive vehicles to bolster the guard.

Western security officials in the Gaza Strip said members of one of Abbas's elite bodyguard units had shown them newly issued anti-tank rockets concealed in backpacks.

In the occupied West Bank city of Ramallah, where Abbas has his headquarters, the guard recently acquired four brand new U.S.-made armoured vehicles worth an estimated $100,000 each.

''It is no secret that (Abbas) is arming himself for a confrontation with his rivals,'' said a veteran of Israel's Shin Bet security service, which helped CIA-led efforts in the 1990s to bolster then-President Yasser Arafat's forces against Hamas.

Palestinian security sources say Hamas is also buying more weapons and training more fighters in the West Bank, where Fatah forces have long been dominant.

The government is under a Western financial embargo aimed at forcing Hamas to recognise Israel and renounce violence.

But Hamas has been able to smuggle weapons and tens of millions of dollars and euros through the Egyptian border with Gaza, Israeli intelligence sources said.

PRICE RISES

In Gaza, where it has enough guns, Hamas has been buying up bullets, Palestinian security sources said. Arms dealers and an Israeli military source said black market bullets were now selling for $1 each -- a steep price in areas where up to half the people live on less than $2 per day.

In the West Bank, Hamas has been buying M-16 rifles. Dealers said heavy demand and a lack of supply have sent prices soaring to as much as $13,000 each, up from $5,400 a year ago.

At the border with Gaza, Israeli forces say militants have acquired hundreds of anti-tank missiles.

While the arsenals of the forces have been growing, they have also increased recruitment.

In a deal to try to calm tension in Gaza, the government agreed to pull a new 3,000-strong militia loyal to Hamas from the streets, but the force will remain in limited locations.

Militants from Abbas's Fatah movement, trounced by Hamas in January elections, deployed a new force of 2,500 men in the West Bank city of Jenin last weekend. They plan to put another 1,000-member force on the streets of Ramallah.

''We have received information from high levels that we have to get united, we have to organise ourselves,'' said a senior militant from Fatah's al-Aqsa Martyrs Brigades.

Fatah is distributing weapons to some local offices to help protect officials and property, sources in the group said.

''It (the situation) is not only delicate, it is also dangerous,'' said Mustafa Barghouthi, an independent Palestinian lawmaker. ''People are not only worried, they're angry. They are angry at this polarisation.''

REUTERS