(Adds Israeli denial) GAZA, Oct 28 (Reuters) - A senior Palestinian official said Israel dramatically reduced fuel supplies to the Gaza Strip on Sunday after threatening to impose sanctions in response to rocket attacks from the impoverished Hamas-ruled territory. But Israel, whose defence minister, Ehud Barak, gave a green light last week for cuts to Gaza's fuel and electricity supplies, said the measure had not yet been implemented. Mojahed Salama, head of the Palestinian Authority's Petrol Agency, said Sunday's fuel imports showed a 40 to 50 percent reduction in diesel and benzine supplies and a 12 percent reduction in fuel for Gaza's power plant. "We sent the supplying company the same daily requests but they said they were sorry and that because of the new imposed sanctions they could only send us a reduced quantity," Salama told Reuters. Israel denied imposing cutbacks on fuel supplies to Gaza. "No instructions have been received from the defence minister, and therefore there have not been any cutbacks," said Captain Shahdi Yassin, spokesman for the Israeli Defence Ministry office that liaises with the Palestinian Authority. Israel says it is seeking non-violent ways of pressuring Hamas, an Islamist group that seized control of Gaza in a June civil war, to stop cross-border rocket salvoes by Palestinian militants. The United Nations has told Israel it must not inflict collective punishment by denying vital supplies to Gaza's 1.5 million residents. Israel quit Gaza in 2005 after 38 years of occupation but continues to control its borders.
