Netanyahu's statements came as Palestinian Authority (PA) Prime Minister Rami Hamdallah visited Gaza for the first time since 2014, with the Fatah-ruled PA and Hamas initiating the first steps in forming joint governance.
"We can not accept fake reconciliation on the Palestinian side that comes at the expense of our existence".
"Economic growth in Gaza Strip will boost the Palestinian economy as a whole", Hamdallah said in the meeting also attended by a number of cabinet ministers.
However, he stressed, the arms of the Palestinian security services must be controlled by the state.
El-Sissi sponsored the negotiations in part because he wants Hamas' cooperation in deterring attacks on Egyptian soldiers in the northern Sinai peninsula bordering Gaza.
Information officer of Gaza's Chamber of Commerce Maher Al-Tabba' told Xinhua that the businessmen underlined the importance of governmental support to the reconstruction of Gaza and work to lift restrictions on access of building and construction material into the Strip.
He also urged an immediate lifting of the Israeli and Egyptian blockade on Gaza and an end to Israel's collective punishment of Palestinians in the enclave.More news: Women plead not guilty to murdering Kim Jong-Nam
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The sides will hold further talks next week in the Egyptian capital Cairo.
"Everything must be in the hands of the Palestinian Authority (PA)", he added.
Hamas called for the measures to be ended immediately as a show of good will.
Hamas, which is considered a terrorist organization by the USA, the European Union and Israel, agreed to cede control of Gaza as funds from overseas dried up and Abbas imposed sanctions that reduced government salaries and cut electricity to three hours a day.
The United States and the European Union blacklist Hamas as a terrorist organisation, complicating the formation of any potential unity government.
President Mahmoud Abbas with his guest, Egyptian special envoy Khaled Fawzi, in Ramallah.