* Unity cabinet to go ahead despite Israeli sanctions threat
* Sides still hammering out details on cabinet appointments
* Govt to be formed of technocrats and independents, Abbas says (Adds details, background)
By Ali Sawafta
RAMALLAH, West Bank, May 31 (Reuters) - Palestinian President Mahmoud Abbas said on Saturday he expects a joint government of his Fatah party and Hamas Islamists will be announced on June 2, completing a unity deal the sides agreed last month.
Meeting with French peace activists in the West Bank city of Ramallah, where his limited self-rule government is based, Abbas said: "We will announce the government the day after tomorrow, it will be formed of technocrats and independents."
None of the unity government's members would belong to either the Western-backed Fatah, which rules the Israeli-occupied West Bank, or Islamist Hamas, which holds sway in the Gaza Strip, Abbas said.
Hamas spokesman Sami Abu Zuhri said he could not confirm that all the details would be completed by Monday.
Both parties see benefits to a unity pact, though disagreements have blocked them from achieving such a government for years. The deal would heal a rift that opened between Fatah and Hamas in 2007 when Hamas seized control of Gaza.
Under a strict blockade imposed by neighbours Israel and Egypt, Hamas struggles to prop up Gaza's economy and pay its 40,000 employees. Abbas, for his part, wants to shore up his domestic support since the collapse of U.S.-brokered peace talks with Israel last month.
ISRAEL THREATENS BOYCOTT
Israel views Hamas as a terrorist organisation and suspended negotiations with Abbas as soon as he announced a unity deal was in the works on April 23. It has said it would impose economic sanctions against any joint government.
Abbas said Israel "informed us today they would boycott us if we announced the government." He did elaborate on which measures Israel has threatened to take.
A Palestinian official said Israel had denied requests by three Gaza Palestinians expected to be named as ministers to attend the new govenrment's swearing-in ceremony in the West Bank.
Israel withheld tax revenues from Abbas last month, in retaliation for Abbas signing accords with international organisations, a step Israel said undermined peace talks.
In his remarks on Saturday, Abbas said a joint government with Hamas would continue to abide by his policy of recognising Israel, though the Islamist group insists it would not change its own policy of rejecting Israel's existence.
Abbas has been keen to assure Western donor countries he will remain the key Palestinian decision-maker and security coordination between his forces and Israel will continue.
Abbas asked Prime Minister Rami Hamdallah on Thursday to head the new unity government, though Fatah and Hamas still disagreed about other cabinet appointments.
In a move seen as boosting control over his party ahead of forming a unity government, Abbas ousted five senior party members on Saturday seen as allied with a leading rival, Mohammed Dahlan, the Palestinian news agency WAFA, said. (Additional reporting by Nidal al-Mughrabi in Gaza; Writing by Allyn Fisher-Ilan; Editing by Robin Pomeroy)