Madagascar leader walks out of power-sharing talks

* Rajoelina rejects co-presidency proposal

* Negotiations extended by 2 days

* Mediators remain hopeful



By Alain Iloniaina

ADDIS ABABA, Nov 6 (Reuters) - Madagascar's leader stormed out of internationally mediated power-sharing talks in the early hours of Friday, threatening to derail attempts to form a national unity government and end months of turmoil.

Andry Rajoelina, who seized power in a March coup, insisted his leadership of the Indian Ocean island, increasingly eyed by investors for its oil and minerals, was not up for negotiation.

The former leader he toppled, Marc Ravalomanana, who is exiled in South Africa, has proposed a dual presidency.

"If they can't accept that I head the country then I leave them responsible for their actions," Rajoelina told reporters as he left the African Union's headquarters in Addis Ababa.

"I am going to leave. Time is up," he said.

It was not immediately clear from his camp whether the former disc-jockey, who at 35 is Africa's youngest leader, planned to return to the negotiating table.

The mediation team, led by former Mozambican president Joaquim Chissano, said the talks would be extended by two days until Nov. 7. Round-table talks would resume mid-morning Friday, Chissano said, adding: "Rajoelina will be there."

Ravalomanana described Rajoelina's walkout as "impolite".

The self-made millionaire, who rejects critics' charges of abusing political office to promote his business interests, entered this week's negotiations refusing to accept Rajoelina as president of an interim government.

But he later proposed he pick an ally to share the president's office.

Madagascar has been convulsed by instability since Rajoelina unseated Ravalomanana in March after weeks of violent protests in the Indian Ocean island's capital, Antananarivo.

Madagascar's power-brokers -- Rajoelina, Ravalomanana and former presidents Didier Ratsiraka and Albert Zafy -- agreed in August to form a consensus government tasked with holding new elections by late next year. But they have since been deadlocked on who should hold the key posts.

Analysts say the crisis has sent economic growth spiralling into negative territory and alarmed major foreign companies investing in Madagascar's oil and mineral reserves. (Writing by Richard Lough; Editing by David Clarke and Philippa Fletcher)