UPDATE 2-Emboldened Hamas leader ends exile, visits Gaza

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* His first visit to Gaza shows growing Hamas confidence

* Given emotional welcome, says visit is a "rebirth"

By Nidal al-Mughrabi and Marwa Awad

GAZA, Dec 7 (Reuters) - Hamas leader Khaled Meshaal ended decades of exile from Palestinian land on Friday with a triumphal first ever visit to the Gaza Strip that underscored the Islamist group's growing confidence following its latest conflict with Israel.

After passing through the Egyptian border crossing, Meshaal knelt and touched the ground with his forehead, offering up a prayer of thanks. He was then greeted in the warm December sun by dozens of officials from an array of competing factions.

Meshaal will spend barely 48 hours in the coastal enclave and attend a mass rally on Saturday that has been billed as both a commemoration of the 25th anniversary of the founding of Hamas and a "victory" celebration following the November fighting.

Israel rejects Hamas's assertion that it won the conflict, which killed some 170 Palestinians and six Israelis.

Speaking to reporters, Meshaal said his arrival in Gaza was like a rebirth that followed on from his natural birth in the nearby West Bank in 1956 and a second that was his narrow escape from an Israeli assassination squad in 1997.

"I pray to God that my fourth birth will come the day we liberate Palestine," he said, clearly moved by his reception, with uniformed police breaking ranks to try and kiss his hand.

"Today is Gaza. Tomorrow will be Ramallah and after that Jerusalem then Haifa and Jaffa," he said. Ramallah is in the West Bank, while the latter cities, which have large Arab populations, are in modern-day Israel.

Later on Friday, he is expected to visit the home of Hamas founder Sheikh Ahmed Yassin, who was assassinated by Israel in 2004, as well as that of Ahmed Al-Jaabari, the group's military commander, who was killed in a similar air strike last month.

Hamas denied seeking guarantees via Egyptian contacts with Israel that Meshaal would not be targeted for assassination in Gaza. There was massive security for his arrival, with gun-toting, black-masked guards from the Hamas military wing patrolling the streets in open-topped trucks and motorbikes.

Meshaal, 56, had been widely understood not to have set foot in the Palestinian territories since he left his native West Bank with his family aged 11. However in his speech he indicated he had returned for a visit as a teenager in 1975.

Hamas has ruled the tiny Gaza Strip and its 1.7 million population since 2007, when it won a brief civil war with its secular rivals Fatah, which still controls the occupied West Bank. Israel had pulled troops and settlers from Gaza in 2005.

The Palestinian movement's founding charter calls for the destruction of Israel but its leaders have at times indicated a willingness to negotiate a prolonged truce in return for a withdrawal to the lines established ahead of the 1967 war, when Israel seized East Jerusalem, Gaza and the West Bank.

Hamas continues to say that it will not recognise the Jewish state officially, and it is viewed as a terrorist group by Israel, the United States and most Western governments.

LEAVING SYRIA

Meshaal ran Hamas from exile in Syria from 2004 until January this year when he quit Damascus because of Iranian-backed President Bashar al-Assad's war against Sunni Muslim rebels, whose religion and politics are closer to those of the Palestinians. He now divides his time between Qatar and Cairo.

His abrupt departure from Syria initially weakened his position within Hamas: ties with Damascus and Tehran had made him important, but with those links damaged or broken, rivals based within Gaza had started to assert their authority.

However, he regained the initiative in last month's rocket war with Israel, working closely with Egypt to secure the truce, and although he says he plans to stand down soon, few in the Gaza Strip expect him to follow through on that pledge.

The highlight of his visit will be an open-air rally on Saturday, which Hamas will use to proclaim victory in its eight-day battle, which ended with the Egyptian-brokered ceasefire.

Gaza City has been festooned with green Hamas flags and a stage set up, complete with a huge model of the makeshift M75 rocket, fired at both Tel Aviv and Jerusalem last month.

Israeli media have barely mentioned Meshaal's return. Israeli officials say the week of round-the-clock bombing raids in November had not only killed Jaabari, but also severely depleted Hamas's weapons stockpile.

"They can dance in the streets as much as they like, but their leaders know what damage was inflicted," said a senior Israeli official in Jerusalem, who declined to be named.

However, the conflict clearly boosted Hamas's political standing in the region, winning it the support of Sunni regional powers, such as Qatar, Turkey and Egypt, who dispatched senior delegations to Gaza in a rare and public display of solidarity.

The Arab Spring revolts of the last two years have brought friends of Hamas to power across the Arab world, above all Egypt's new President Mohamed Mursi, whose long-banned Muslim Brotherhood is spiritual mentor to Hamas.

Saturday's rally is not being held on the exact date of Hamas's founding, but on the 25th anniversary of the start of the first Palestinian uprising, or intifada, against Israel.

That is being seen as an overture to other factions and a hint of a new willingness to seek reconciliation with Western-backed Palestinian President Mahmoud Abbas, who last week won de-facto statehood recognition from the U.N. General Assembly.

"There is a new mood that allows us to achieve reconciliation," Meshaal told Reuters in an interview last Friday in Qatar, where he has set up home since leaving Syria.

Meshaal is viewed as more moderate than the local Gaza hierarchy and some Israeli analysts believe that for all the tough rhetoric expected in the coming days, he might well be someone with whom Israel can one day do business.

"From Israel's point of view, Khaled Meshaal now plays a more positive role," said Shlomo Brom, a senior research fellow at the Institute for National Security Studies (INSS), a research institute based just up the coast in Tel Aviv.

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