Kenyan leaders break deadlock on cabinet: sources

NAIROBI (Reuters) - Kenyan President Mwai Kibaki and opposition leader Raila Odinga struck a deal on a power-sharing cabinet on Saturday after secret one-on-one talks to end a six-week impasse, sources close to the talks said.

The formation of a coalition cabinet is the crux of a deal to end the east African nation's post-election crisis. More than 1,200 people died and 300,000 were displaced in what became the country's bloodiest moment since independence in 1963.

Once the cabinet is named and sworn in, Odinga will become Kenya's prime minister.

"There is a deal and the cabinet will be announced tomorrow (Sunday)," said one of two sources who confirmed the deal to Reuters.

A diplomat who spoke on condition of anonymity also said a deal had been reached and would be announced on Sunday.

There were no immediate details about the make-up or size of the cabinet, nor about whether either side gave up claims to influential ministries they had haggled over.

Spokesmen for Odinga's Orange Democratic Movement (ODM) and the government declined to comment.

The two leaders had agreed to announce a 40-member coalition cabinet on April 6 but the deal fell apart at the last minute, unsettling Kenyans and investors fearful of a return to violence.

Kibaki and Odinga met on Saturday at Sagana State Lodge about 100 km (60 miles) northeast of Nairobi, a fishing retreat that was a wedding gift to Queen Elizabeth before she ascended to the throne. Britain gave it back to Kenya at independence.

Kibaki, 76, and Odinga, 63, were under heavy local and international pressure to break the deadlock on the cabinet, part of a peace deal brokered in February by former U.N. chief Kofi Annan.

Over the week since their first cabinet deal fell apart, Kibaki and Odinga have urged calm and said their positions were not that far apart. But both had publicly refused to be the first to budge, saying it was the responsibility of the other.

The original deal called for a 20-20 split in the lucrative cabinet posts that both view as a reward to their biggest supporters.

Violence exploded after Odinga said Kibaki, Kenya's longest-serving politician, had rigged his re-election at the December 27 vote that was the closest presidential election in the country's history.

The electoral fight degenerated into ethnic killings and rioting that shattered Kenya's image as a stable tourism and trade hub, with one of sub-Saharan Africa's most promising economies.

Already, inflation has jumped to nearly 22 percent over the disruption, and the lost investment and tourist arrivals have forced the government to trim its growth forecast to between 4.5 and 6 percent from 6.9 percent.

Once the cabinet is sworn in, Kibaki and Odinga are tasked with spearheading a new constitution within 12 months to address issues of land, wealth and power that the have simmered for decades and which the election crisis revealed.

(Writing by Bryson Hull; Editing by Alison Williams)