By Crispian Balmer and Nidal al-Mughrabi
GAZA (Reuters) - After receiving a hero's welcome on his return from decades in exile, Hamas leader Khaled Meshaal will attend a rally in Gaza on Saturday to mark the founding of his Islamist group and celebrate "victory" over Israel.
At least 200,000 Palestinians are expected to attend the outdoor event, which is likely to be used by Meshaal to promote Hamas's growing stature in the Arab world and push the case for reconciliation with its secular political rival, Fatah.
Meshaal, 56, is on his first visit to the Gaza Strip and was moved to tears on Friday by the ecstatic reception he received from flag-waving crowds as he toured the tiny territory, which is home to 1.7 million Palestinians.
His trip comes just two weeks after Hamas fought an eight-day conflict with Israel that killed some 170 Palestinians and six Israelis and ended with an Egyptian-brokered ceasefire.
Hamas claims it won the conflagration. Israel disputes this, saying it not only killed the Islamist group's military commander but also caused significant damage to its arsenal of rockets. The Israeli media largely ignored his visit to Gaza.
There is no denying the fighting boosted Hamas's standing in the region, winning it the support of Arab neighbors, many of whom used to treat the group as a pariah before the Arab Spring uprisings ushered in several sympathetic Islamist governments.
"Israel must now be fuming as it watches this Gaza victory," said Abu Waleed, 52, as he stood in a crowd on Friday, waiting to catch a glimpse of Meshaal, who survived a 1997 assassination attempt by Israeli Mossad agents in Jordan.
The rally on Saturday commemorates the 25th anniversary of the founding of Hamas and the start of the first Palestinian uprising, or intifada, against Israel in December 1987.
The recent war will feature prominently, with a huge model M75 missile erected on the open-air stage to recall the rockets that were fired last month towards Tel Aviv and Jerusalem.
Local Fatah leaders are also due to attend - the first time Palestinian President Mahmoud Abbas's faction has taken part in such an event since at least 2007, when it fought a brief civil war with Hamas in Gaza that was won by the Islamist group.
"Meshaal's speech will outline the priorities of the Hamas movement in the coming future, and especially the implementation of reconciliation (with Fatah)," Hamas spokesman Sami Abu Zuhri told Reuters.
Clearly aware of the yearning amongst ordinary Palestinians for an end to the divisions that have weakened their cause on the world stage, Meshaal repeatedly returned to the subject during his many stops around Gaza on Friday.
"With God's will ... reconciliation will be achieved. National unity is at hand," Meshaal shouted through a microphone at the ruins of one house destroyed last month by an Israeli air raid that killed 12 civilians, including four children.
But reconciliation is easier said than done.
While Hamas promotes armed resistance against the Jewish state, Fatah says it wants a negotiated deal with Israel. Equally problematic, both are embedded in their power bases, with their own security forces that they do not want to give up.
Hamas's founding charter calls for the destruction of Israel but its leaders have at times indicated a willingness to negotiate a prolonged truce in return for a withdrawal to the lines established ahead of the 1967 war, when Israel seized East Jerusalem, Gaza and the West Bank.
Nonetheless, it says it will not recognize the Jewish state officially, and is viewed as a terrorist group by Israel, the United States and most Western governments.
Meshaal ran Hamas from exile in Syria from 2004 until January this year when he quit Damascus because of Iranian-backed President Bashar al-Assad's war against Sunni Muslim rebels, whose religion and politics are closer to those of the Palestinians. He now divides his time between Qatar and Cairo.
His abrupt departure from Syria initially weakened his position within Hamas: ties with Damascus and Tehran had made him important, but with those links damaged or broken, rivals based within Gaza had started to assert their authority.
Despite regaining the initiative during the Israeli conflict, working closely with Egypt to secure the truce, he says he plans to step down as leader shortly.
Hamas has been staging a secretive leadership election for the last six months and some insiders said the huge welcome Meshaal has received on Gaza's pot-holed streets will put pressure on him to stay on as the group's overall chief.
(Additional reporting by Marwa Awad; Editing by Michael Roddy)