Annan moves Kenya talks in drive for speedy deal

NAIROBI (Reuters) - Former U.N. boss Kofi Annan has invited Kenya's feuding political parties to continue talks at a secret location outside Nairobi, with the aim of reaching an agreement within two or three days, a spokesman said on Monday.

"During this period he has asked for a complete news blackout," added a statement from the spokesman for Annan, who is mediating the post-election crisis in Kenya.

With hopes rising for a political solution to one of Kenya's darkest moments since independence, Annan has chided the media for speculation and officials on both sides for leaking details of a possible power-sharing deal.

"Kofi Annan ... today invited the negotiating teams to resume discussions outside of Nairobi with the goal of reaching agreement on the outstanding political issues in the next 48-72 hours," the statement said.

"He has urged the parties not to discuss issues under negotiation with anyone outside the negotiating room."

Earlier on Monday, negotiators for President Mwai Kibaki and opposition leader Raila Odinga held talks in a mood of national optimism that a formula can be quickly reached to overcome their dispute over a December 27 vote.

More than 1,000 people have been killed and 300,000 uprooted in a wave of post-election violence that has shattered Kenya's image as a stable democracy and a regional hub for business, tourism and transport.

But both sides are now said by party sources to have agreed in principle on power-sharing as their political positions appeared to soften. Odinga's Orange Democratic Movement is no longer calling on Kibaki to step down, the sources say.

Annan, who has warned against "speculation and rumors", was expected to brief parliament on Tuesday about his mission.

Taking their cue from the Ghanaian diplomat, both sides also tried to calm premature jubilation in a nation traumatized by scenes of burning, looting and killing -- much of it along ethnic lines among Kenya's more than 40 different groups.

Though triggered by the presidential vote tally, the bloodshed has exposed deep resentment over inequalities in land ownership, wealth and power dating back to British colonial rule. Critics say politicians have done more to manipulate those tensions than resolve them in the decades since.

PATIENCE

Britain's Africa Minister Mark Malloch-Brown told Reuters he was cautiously hopeful Kenya's political rivals could strike a deal this week though there is still "a mountain to be climbed".

He said he expected a proposed agreement to call for power-sharing until a new election. Reforms to the constitution -- which currently gives the president vast powers -- and election commission would be made before the vote.

Government officials have expressed optimism about progress made behind closed doors, but appealed for patience.

Kenya's opposition says its larger numbers in parliament entitle it to a bigger share of cabinet posts. But the Kibaki side points to the official ruling of the electoral board that he won the presidential vote, albeit narrowly.

As talks resumed in a luxury hotel in the capital, Kibaki urged Kenyans who have fled their homes to return.

"We are going to assist in rebuilding houses that were torched," he said at a Nairobi high school where he launched a free secondary school program.

The protests and rioting that began immediately after Kibaki's December 30 swearing-in spread to many parts of the nation, especially the Rift Valley and Nairobi slums.

The uncertainty has battered Kenyan markets. The stock index has dropped about 12 percent and the shilling has fallen more than 10 percent against the U.S. dollar since the crisis began.

Both sides have already agreed principles to end violence and help refugees. Annan gave them until mid-February to resolve agenda item No. 3: what to do about the disputed election.

Deeper underlying issues, such as land grievances and wealth inequality, are to be tackled within a year.

(For special coverage from Reuters on Kenya's crisis see:

here)

(Additional reporting by Duncan Miriri and Wangui Kanina in Nairobi and Adrian Croft in London; editing by Katie Nguyen and Andrew Roche)