Palestinian leader Mahmoud Abbas (search) on Saturday set overdue legislative elections for Jan. 25, a move that could boost his international credibility and encourage his biggest political rival, Hamas, to hold its fire during Israel's ongoing Gaza pullout.

Abbas also said he signed a decree giving his government control over all lands and assets left behind by Israeli troops and settlers. The decree said no one can make personal use of the real estate until ownership has been sorted out.

Just as Abbas spoke, dozens of masked Hamas (search) gunmen briefly took over Gaza City's central square, keeping police cruisers at bay as they announced they would not halt attacks despite Israel's withdrawal. Their appearance in the park was a direct challenge to Abbas, who has appealed to militants not to flaunt their weapons in public. It also underscored the reluctance of police to confront gunmen.

The Hamas gunmen said they would continue attacks until Israel (search) also withdraws from the West Bank and east Jerusalem.

"This retreat [by Israel] does not mean the end of our battle, but it is the beginning," said one gunman, who only gave his nom-de-guerre, Abu Obeidah.

A sign on a nearby wall said, "My dream is not going to be completed without Jerusalem."

"We will not stand with our hands tied as the remainder that our land remains occupied and our holy sites are desecrated," Abu Obeidah said. "We will work to strengthen the resistance in these areas for the resistance is the only thing that will kick them out of these areas."

Hamas' political leaders welcomed the setting of the election date. Hassan Yousef, a Hamas leader in the West Bank, said his group was ready for its first national contest. In recent months, Hamas has made a strong showing in several rounds of municipal elections and was also expected to do well in the parliament vote.

"We have prepared our list of candidates, and we have even reserved a seat for the Christian minorities," Yousef said.

Hamas opposes the existence of Israel and has killed hundreds of Israelis in attacks.

The elections initially were to have been held in July but were postponed because of Israel's pullout. The chief Palestinian negotiator, Saeb Erekat, said last week that elections would be held Jan. 21, based on a decision by the PLO Executive Committee. However, officials changed the date so it would not interfere with a major Muslim holiday and the pilgrimage to Mecca, Erekat said.

Abbas announced the date in a speech to high school students in Gaza City.

In setting a date, he could strengthen his international image as a reformer and give new incentive to Hamas to suspend attacks during Israel's Gaza pullout. Israel has warned it would launch a major ground offensive if Israeli soldiers and settlers were attacked during the withdrawal.

Hamas has been torn over how it should act during the withdrawal. Firing on Israeli soldiers and settlers could boost Hamas claims that it has driven Israel out by force. On Friday, two Hamas militants were wounded when an explosive device they were carrying accidentally blew up before they could plant it near the evacuated Kfar Darom settlement.

However, the group could lose public support if its attacks invite massive Israeli retaliation, something Hamas campaigners may not want to risk as they prepare for the legislative election. With a date set, that incentive becomes even stronger.

About 9 percent of the settlement land was owned by individual Palestinians before being expropriated by the Israeli military for the construction of army bases and settlements. Abbas said he appointed a ministerial committee to decide individual land claims, and courts would be the last resort.

The Palestinian Authority has said it will replace the one-story settlement homes with high-rise apartment buildings to address a severe housing shortage in overcrowded Gaza.

Israeli troops, meanwhile, took a break Saturday, the Jewish Sabbath, after evacuating 87 percent of Gaza settlers in just 21/2 days. All but four of 21 settlements were vacant.

The government is compensating settlers through a complex formula that takes into account such issues as home size, number of family members and amount of time residing in the settlement. Compensation usually amounts to $200,000-$300,000 per family.

Settlers who stayed in Gaza after the deadline could lose some of that compensation.

In coming weeks, the settlement homes are to be demolished by Israeli troops. The first demolition was Friday at Kerem Atzmona, an illegal outpost within view of the Mediterranean. The massive shovel of a yellow excavator flattened about 20 homes with just a few blows to each. Cranes lifted bomb shelters — concrete boxes with thick metal doors — onto a flatbed truck to be hauled away and recycled.

The removal of settlers was to resume Sunday, and security officials said they expected all settlers to be out of Gaza by Tuesday.

By midweek, Israel was to begin clearing settlers out of two small West Bank enclaves, Sanur and Homesh, to which hundreds of pullout opponents have flocked in recent weeks to resist evacuation. Residents of two other West Bank settlements marked for dismantling already left their homes.

Abbas, meanwhile, has been using the withdrawal to boost his political standing, telling his people they would have more jobs, housing and freedom of movement once the Israelis leave.

On Friday, he told a cheering crowd at the closed Gaza International Airport that Israel's departure was bringing "historic days of joy" to the Palestinians. He promised that the airport, whose runways were destroyed by Israel in fighting in 2000, would again become a gateway for Palestinians — though that will require Israel's blessing.

Abbas also pledged the Palestinian Authority would rebuild homes demolished by Israel during the past five years of conflict. He promised to reserve 5 percent of government jobs for the disabled, mainly war wounded.