By Jonathan Saul JERUSALEM, Dec 7 (Reuters) - U.N. agencies appealed on Thursday for donors to provide $453.6 million in emergency humanitarian funds for the Palestinian territories next year as poverty deepens amid a financial crisis. The appeal is the largest launched for Palestinians in the Gaza Strip and the West Bank and comes on top of $384 million sought for this year, the United Nations said. "Two-thirds of Palestinians in the West Bank and the Gaza Strip are now living in poverty," Kevin Kennedy, the U.N.'s humanitarian coordinator, said in a statement. "Growing numbers of people are unable to cover their daily food needs." The United Nations said the deterioration was linked to the financial woes faced by the Palestinian Authority, which is led by the militant Islamic group Hamas. The United States and Europe imposed crippling sanctions on the administration when Hamas took power in March because of the group's refusal to recognise Israel and renounce violence. Israel has also withheld tax and customs receipts. "It is increasingly difficult for people to cope in such a volatile and unpredictable environment," said Karen Koning AbuZayd, commissioner General of the U.N. Relief and Works Agency for Palestine Refugees (UNRWA). About 1.4 million Palestinians live in coastal Gaza and 2.4 million in the Israeli-occupied West Bank. On top of the Western sanctions, Palestinians say Israeli settlements, military checkpoints and a barrier cutting into the West Bank have also hit their economy because they seal off towns from workplaces, schools and agricultural fields. Israel says the barrier and checkpoints are needed to prevent militant attacks. In Gaza, residents say Israel's frequent closures of the strip's border crossings have paralysed life. Israel says it imposes the measures for security reasons. "Humanitarian assistance can cushion a deteriorating situation, but it ultimately cannot stop the decline," said David Shearer, head of the U.N. Office for the Coordination of Humanitarian Affairs in the Palestinian territories. "Ultimately, only a political settlement can generate significant improvement." Israel and Palestinian militant groups declared a truce in Gaza on Nov. 26 in the wake of a crushing, five-month-old Israeli army offensive. The international community hopes the shaky ceasefire can revive peace negotiations that foundered in 2000, just before the start of a Palestinian uprising.
