Marking 40 years of Israeli occupation, Palestinian President Mahmoud Abbas on Tuesday warned that his people are on the verge of civil war and said infighting is worse than living under Israeli military rule.

Israel's capture of the West Bank, Gaza and east Jerusalem in the 1967 Mideast War was a "black day" for the Palestinians, who paid a heavy price for defeat, Abbas said in a televised speech on the anniversary of the June 5, 1967, start of hostilities that lasted six days and changed the face of the region.

In the Palestinian territories, the mood was somber Tuesday, with many echoing Abbas' concern about the internal bloodshed. Others said they didn't expect an end anytime soon to the military rule that permeates every aspect of daily life in the Palestinian territories.

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"I never expected to mark 40 years of occupation. It's painful, it catastrophic," said Omar Jalad, a 55-year-old accordion player from the West Bank city of Ramallah.

In Israel, the anniversary underscored the divisions over whether the war was a blessing or a curse.

The dovish camp says the rule over the Palestinians has eroded Israel's values and weakened its international standing. Many devout Jews feel the return to the biblical heartland of the West Bank is a step toward redemption, and hard-liners argue the land buffer gained by the war made Israel more secure.

The argument played itself out Tuesday in Hebron, where some 200 Israeli demonstrators called on the government to remove some 500 militant Jewish settlers from the biblical West Bank city, home to 160,000 Palestinians.

The demonstrators faced off against 30 counter protesters. "I'm here to protest the occupation in one of the most violent places in the territories," said Doron Narkiss, 52, a teacher from Tel Aviv. David Wilder, a spokesman for the Hebron settlers, said the protest was inflammatory: "How can Jews support those trying to kill us?"

In the Palestinian territories, worry about fighting between Abbas' Fatah movement and the Islamic militant Hamas dominated speeches and commemorations. The two parties have governed in an uneasy coalition since March, after a year of Hamas-only rule, but another round of deadly gun battles erupted in May.

"Regarding our internal situation, what concerns us all is the chaos, and more specifically, being on the verge of civil war," Abbas said in his anniversary speech.

In an unusually frank comment, Abbas said he realized after hundreds of hours trying to negotiate an end to the bloodshed that "what is equal to the danger of occupation, or even more, is the danger of infighting."

Abbas warned that the fighting has harmed the Palestinians' standing in the world. He also criticized Palestinian militants, who captured an Israeli soldier a year ago and continued to fire rockets at Israeli towns near Gaza after Israel's pullout from the coastal strip in 2005. Abbas said the militants only did harm by provoking Israeli retaliation that has left hundreds of Palestinians dead.

In recent weeks, following a Hamas rocket barrage, Israel has stepped up its military campaign in Gaza. Early Tuesday, Israeli tanks and infantry ended a 24-hour incursion into a sparsely populated area in southern Gaza, searching houses and detaining about 40 Palestinians for questioning. Four people were arrested.

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In the West Bank city of Ramallah, about 300 people held a memorial rally, holding banners reading "40 Years of Occupation." The Palestinian parliament convened for a special session.

In Israel, there were no official ceremonies Tuesday because the state follows the Hebrew calendar for special events. On May 14, Israeli Prime Minister Ehud Olmert addressed parliament to mark the capture of east Jerusalem.

Just like the Palestinians, Israelis were largely pessimistic.

"With the passage of time, it became clear that there is no such thing as an enlightened occupation. The longer the occupation continued, the less enlightened and the more inhuman, insufferable, corrupt and corrupting it became," Israeli commentator Sever Plocker wrote in the Yediot Ahronot daily.

Israeli troops and settlers pulled out of Gaza in 2005, but the Israeli military still keeps a tight grip on Palestinian movement there, controlling cross-border movement of people and goods.

In the West Bank, hundreds of Israeli roadblocks prevent Palestinians from moving freely, their economy is stifled and their lives are dominated by the ever-present Israeli soldier, bureaucrat or roadblock.

Israel is also building a network of walls, trenches and barbed-wire fences around the West Bank, jutting into the territory in several places. Going up ostensibly to stop Palestinian militants launching raids into Israel, the barrier puts some 8.5 percent of Palestinian land on the "Israeli" side.

The Palestinians want the West Bank, Gaza and largely Arab east Jerusalem for their future state.

Years of polls show both sides want a state living in peace next to the other state, but their leaders have proved unable to overcome the historic stumbling blocks, especially control over Jerusalem and a solution for Palestinian refugees from the 1948-49 war that followed Israel's creation.

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