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By Nidal al-Mughrabi GAZA (Reuters) - The Palestinian movement Hamas on Saturday elected Ismail Haniyeh to head its political office, a leadership change that comes as the Islamist group looks to reconcile with Palestinian rivals. Haniyeh, a former deputy chief, will replace Qatar-based veteran Khaled Meshaal, who steps down at the end of his term limit just as Hamas appeared to have softened its stance toward Israel in a new policy document last week. The group maintains a sizeable armed wing in the Gaza Strip since seizing the coastal territory in 2007 from the rival Fatah party, which is based in the West Bank, and has fought three wars with Israel.Israeli officials had no immediate comment on the election. Gaza-born Haniyeh, 54, served as Palestinian prime minister after Hamas won a 2006 parliamentary election and he continued to claim the title, despite being officially sacked by Western-backed Palestinian President Mahmoud Abbas, who heads Fatah. One senior Fatah official, Azzam Al-Ahmed, wished Haniyeh "good luck" and called on him to make an effort to end the Palestinian divisions. But Al-Ahmed also said Hamas must give up its control of Gaza, something Haniyeh has refused to do. Hamas is listed as a terrorist organisation by the United States and European Union. Some political analysts and U.N. officials believe a more regular engagement with Hamas's political wing could help moderate the group's overall position. Gaza-based political analyst Hani Habib said he did not forsee a big paradigm shift in internal Palestinian politics under the new leadership. Haniyeh, he expects, will be "more flexible on different aspects, maybe foremost is the reconciliation, though I don't see a near end to divisions given the wide gap between the positions of Hamas and Fatah." Hamas last week dropped its longstanding call for Israel's destruction and severed ties with the Muslim Brotherhood in a policy shakeup announced at its main overseas office in the Qatari capital. The move, dismissed by Israel, appeared aimed at improving ties with Gulf states and Egypt as Abbas visited new U.S. President Donald Trump in Washington, who expressed interest in renewing Israeli-Palesitinian peace efforts. Hamas in its new document agrees to a transitional Palestinian state within frontiers pre-dating the 1967 Middle East war but continues to refuse to recognize a right for Israel to exist and backs an armed struggle, while Abbas recognizes Israel and seeks a final peace agreement based on those lines. (Additional reporting by Ali Sawafta; Writing by Noah Browning)