* Hard-to-reconcile demands make ceasefire elusive
* Hamas, Islamic Jihad at Cairo talks, Israel no-show (Adds quote from Egyptian source)
By Lin Noueihed and Yasmine Saleh
CAIRO, Aug 4 (Reuters) - Palestinian groups including envoys of Hamas and Islamic Jihad held their first formal meeting in Cairo on Monday with Egyptian mediators hoping to secure a durable ceasefire with Israel after more than three weeks of fighting.
Talks focused on a joint list of demands agreed by the Palestinian factions on Sunday, including an appeal to lift the blockade on Gaza. It was not clear how far the talks would progress, however, after Israel declined to send its envoys.
Palestinian demands include a ceasefire, the withdrawal of Israeli forces from Gaza, the lifting of a blockade, the release of prisoners and the start of a reconstruction process, delegation members said on Sunday.
The talks began at noon (0900 GMT) under the auspices of Egypt's powerful intelligence service and lasted about two hours. Reuters phone calls to Palestinian delegates after the meeting went unanswered.
An Egyptian diplomatic source said Egypt had asked the Palestinian delegation to minimise their public statements to allow the mediation the maximum chance of success.
"Egypt will now discuss the Palestinian demands with the United States and Israel," the source said.
Egyptian diplomatic sources said that while Cairo might contemplate easing the limited freedom of movement across its own border with Gaza, it was unlikely to accept Palestinian calls to allow a normal flow of trade.
Egypt insists that any discussion over the Rafah border crossing takes place bilaterally with the Palestinian Authority rather than as part of any overall deal between the Palestinians and Israel to ease the Israeli blockade, the sources said.
Egypt has positioned itself as a mediator in successive Gaza conflicts, although like Israel it opposes Hamas - a year after Cairo's elected Islamist president was toppled by the military - and has struggled to seal a deal to end the latest fighting.
Media speculation that U.S. Deputy Secretary of State Bill Burns would fly to Egypt to participate in indirect truce talks had not been borne out by Monday. A U.S. embassy official declined to say if or when Burns might arrive.
A U.S.- and U.N.-brokered ceasefire proposal broke down within two hours on Friday, with Israel and Hamas trading blame.
Qatar, a backer of Hamas, has stayed out of the Egypt truce talks. Doha has, however, continued parallel consultations with Turkey and U.S. Secretary of State John Kerry aimed at finding an end to the crisis should Egypt fail, a Gulf source said.
In the absence of a mediated disengagement deal with Hamas, Israel has already begun to wind down its offensive. It says the army has completed the main objective of the ground assault, the destruction of cross-border infiltration tunnels from Gaza.
Israel began aerial and naval bombardment of Gaza on July 8 after what it said was a surge of cross-border rocket salvoes by Hamas and others. It later sent in armoured ground forces.
Gaza officials say 1,804 Palestinians, most of them civilians, have been killed and more than a quarter of its 1.8 million residents have been displaced. Israel has confirmed that 64 soldiers have died in combat, while Palestinian shelling has killed three civilians in Israel. (Additional reporting by Amena Bakr in Doha; Editing by Mark Heinrich)