Jerusalem ( CNN ) -- Israel 's Security Cabinet announced Thursday the country wo n't hold peace negotiations with a Palestinian government backed by the militant Hamas movement . The development came a day after Palestinian rival movements Fatah and Hamas embarked on an effort to form a unity government . The Security Cabinet is the part of the Israeli full Cabinet tasked with making security decisions . `` Instead of choosing peace , Abu Mazen formed an alliance with a murderous terrorist organization that calls for the destruction of Israel , ' said Prime Minister Benjamin Netanyahu , referring to Palestinian President Mahmoud Abbas . `` Whoever chooses the terrorism of Hamas does not want peace . '' The latest development comes amid deterioration of U.S.-brokered peace talks between the Palestinian Authority and Israel -- talks that Hamas , a militant Islamic group that has n't recognized Israel , opposed . Fatah dominates the Palestinian Authority . Netanyahu said the agreement between Abbas and Hamas was signed `` even as Israel is making efforts to advance the negotiations with the Palestinians . `` It is the direct continuation of the Palestinians ' refusal to advance the negotiations , '' Netanyahu said . `` Only last month , Abu Mazen rejected the framework principles proposed by the United States . Abu Mazen has refused to even discuss recognizing Israel as the national state of the Jewish people . He violated existing agreements by unilaterally applying to accede to international treaties and then formed an alliance with Hamas . '' Netanyahu noted that the convenant for Hamas `` calls for Muslims to fight and kill Jews . Hamas has fired more than 10,000 missiles and rockets at Israeli territory and has not halted terrorist actions against Israel even for a minute . '' Thursday 's announcement came on a day that the Israeli military and Palestinian militants clashed near the fence separating northern Gaza and Israel . Israel 's military said a bomb detonated along the fence in a `` failed attempt to hurt Israeli soldiers , '' and that Israeli forces responded . The military did not elaborate . Palestinian security sources said militants tried to target an Israeli military vehicle on the Gaza side of the border area , and that there were heavy exchanges of fire . Neither side reported injuries . Mustafa Barghouti : `` Palestinians are in a unified camp '' Fatah and Hamas announced Wednesday they will begin discussions to form a unity government . An interim government could be finalized in the next five weeks , with elections possible by early 2015 , Fatah spokesman Fayez Abu Eitta said . After the reconciliation was announced , Netanyahu 's office said Israel canceled peace negotiations that were scheduled to take place Wednesday night . Israel and the Palestinian Authority face an April 29 deadline to agree on a framework for a comprehensive peace treaty , but the sides appear far apart . Mustafa Barghouti , a Palestinian lawmaker involved in the Hamas-Fatah talks , hailed what he called the `` end to the division between the Palestinian people . '' `` Palestinians are in a unified camp , and Israel can not claim that Palestinians can not negotiate on behalf of all Palestinians , '' Barghouti told CNN on Wednesday . The Palestinian territories of Gaza and the West Bank have been run separately for seven years . The split began taking shape in 2006 when Hamas , participating in Palestinian polls for the first time , won a majority in the Palestinian parliament . The Palestinian Authority formed a coalition government with Hamas that year , with Abbas retaining the presidency and Hamas member Ismail Haniya becoming prime minister . But when Abbas dissolved the government in 2007 , Hamas seized control of Gaza , and Haniya became Gaza 's de facto political leader . The West for years has shown support to Fatah and warned it not to join hands with militant Hamas , which several countries have deemed a terrorist organization . Reconciliation talks started Tuesday evening , after Abbas sent a Fatah delegation to meet with Hamas representatives in Gaza . It was n't immediately clear who would lead , though Abbas , whose Fatah group runs the West Bank , is a possibility for premier , Abu Eitta said . Hamas , Fatah announce talks to form Palestinian unity government . CNN 's Talal Abu Rahma contributed to this report .
NEW : Palestinian military , Israeli militants clash near Gaza border . Netanyahu calls Hamas `` a murderous terrorist organization '' This comes amid a deterioration of U.S.-brokered peace talks . Hamas runs the West Bank and Hamas dominates in Gaza .