By Yasmine Saleh

CAIRO, March 4 (Reuters) - An Egyptian court on Tuesday banned all activities of Hamas inEgypt in a further sign that Cairo's military-backed government aims to squeeze the Palestinian Islamist group that rules neighbouring Gaza, regarding it as a security threat.

Hamas is an offshoot of Egypt's Muslim Brotherhood, which has been declared a terrorist group by the authorities and subjected to systematic repression since the army ousted one of its leaders, Mohamed Mursi, from the presidency last July.

"The court has ordered the banning of Hamas work and activities in Egypt," the judge, who asked to remain anonymous, told Reuters.

When in power Mursi gave red-carpet treatment to Hamas, angering many secular and liberal Egyptians who saw this as part of a creeping Islamist takeover following the pro-democracy uprising of 2011.

The military-buttressed authorities now classify Hamas as a significant security risk, accusing the group of supporting an Islamist insurgency that has spread quickly since Mursi's downfall, allegations it denies.

Security officials had told Reuters in January that after crushing the Muslim Brotherhood at home, military rulers planned steps to undermine Hamas.

The court also ordered the closure of Hamas offices in Egypt, one of the judges overseeing the case told Reuters. The judge stopped short of declaring Hamas a terrorist group, saying the court did not have the jurisdiction to do so.

Hamas condemned the ruling.

"The decision harms the image of Egypt and its role towards the Palestinian cause. It reflects a form of standing against Palestinian resistance (to Israel)," said Sami Abu Zuhri, a spokesman for the Gaza-based militant organisation.

During Mursi's year in power, Hamas held secretive internal elections in Egypt in 2012. A top Hamas official, Musa Abu Marzouk, lives in Cairo and may now be at risk of arrest in the wake of the court decision.

The case against Hamas was filed by a group of Egyptian lawyers after Mursi's removal last year asking for it to be outlawed in Egypt and designated a terrorist organisation.

ISLAMIST INSURGENCY SPREADING

Islamist militants based in Egypt's Sinai region, which has a border with Gaza, have stepped up attacks on police and soldiers since Mursi's political demise. Hundreds have been killed by an insurgency that has spread to other parts of Egypt, the largest and most populous Arab country.

Since seizing power in Egypt last summer, Egypt's military has crippled the Gaza economy by destroying most of the 1,200 tunnels used to smuggle food, cars and weapons to the coastal enclave, which is under an Israeli blockade.

Egyptian officials say it could take years to undermine Hamas. But they believe working with Hamas's main Palestinian political rival, the Western-backed Fatah movement, and supporting popular anti-Hamas activities in Gaza will weaken the group, several security and diplomatic officials said.

In early January, Cairo publicly hosted the first conference of a new anti-Hamas youth group called Tamarud "Rebel"), the same name used by the Egyptian youth movement that spearheaded last year's mass protests against Mursi.

Members of the Palestinian Tamarud stood with the Palestinian flag wrapped around their necks to highlight what they called Hamas's crimes against activists in Gaza.

Hamas seized control of the Gaza Strip in 2007 after a brief civil war against Fatah, which is led by Palestinian President Mahmoud Abbas.

Egyptian officials said Hamas would now face growing unrest in Gaza similar to that in Egyptwhich has overthrown two presidents since the Arab Spring in 2011. Cairo plans to support opposition activism in Gaza to try to cripple Hamas.

Both the Muslim Brotherhood and Hamas deny accusations of terrorism, and the Brotherhood says it remains committed to peaceful activism despite Cairo's security clampdown.

Egypt has arrested almost the entire Brotherhood leadership and thousands of its faithful, and security forces have killed hundreds of pro-Mursi demonstrators in the streets.

Analysts say such harsh measures may encourage Brotherhood members who have gone underground to take up arms against the state. That would complicate efforts to end political turmoil and violence that have hit the economy hard.

Mursi, who was freely elected, is now on trial in several cases on charges including inciting the murder of protesters during his presidency and collaborating with Hamas to stage terrorist attacks in Egypt. He denies the charges and accuses the army of staging a coup that undermined democracy. (Additional reporting by Nidal Al Mughrabi in Gaza and Noah Browning in Cairo; Writing by Michael Georgy; Editing by Mark Heinrich)