Members of the Palestinian security forces launched a wave of anti-government protests Sunday in the Gaza Strip demanding salaries that are long overdue.  The dire economic situation and differing political agendas have put rival Palestinian factions on a collision course.

Armed Palestinian police took to the streets of Gaza City in a fresh wave of protests against the government, led by the Islamic militant group Hamas. The police, from the rival Fatah faction, have not received their salaries since Hamas took power seven months ago. Hamas has been crippled by international sanctions and has been unable to pay the salaries of 165,000 government employees, half of them from the security forces.

Angry policemen forced merchants to close their shops and vandalized the property of those who refused.

They also burned tires on main highways, sending black plumes of smoke into the air and snarling traffic.

The protests erupted hours after a senior Fatah activist was killed in a gun battle with Hamas militiamen. It is the latest episode in a deepening power struggle between the two factions that has raised fears of a Palestinian civil war.

"I don't see any kind of possible co-existence nowadays between Fatah and Hamas under the current circumstances, so therefore I believe the friction will prevail," said Palestinian analyst Wadia Abu Nasser.

In a bid to resolve the crisis, moderate Palestinian president and Fatah leader, Mahmoud Abbas, has tried to form a national unity government with Hamas that would be more acceptable to the international community. Mr. Abbas supports reviving the peace process with Israel. But talks on a unity government collapsed when Hamas refused to recognize Israel, a key international demand for ending sanctions.

The unrest comes on the eve of the three-day Muslim holiday of Eid el-Fitr that begins Monday, marking the end of the holy month of Ramadan. It is supposed to be a joyful time of festive meals and buying gifts. But cash-strapped Palestinians feel the economic crunch especially at times like these, making for a tense holiday in Gaza.