Mugabe and Tsvangirai still at odds on ministries

HARARE (Reuters) - President Robert Mugabe and opposition leader Morgan Tsvangirai failed to settle differences in talks on Saturday over the finance and home affairs ministries in a new Zimbabwe government.

A meeting of the two men, also attended by Arthur Mutambara, leader of a smaller faction of the opposition Movement for Democratic Change (MDC), was held to try to break the deadlock over cabinet posts which threatens a power-sharing deal.

"The president and the two leaders of the MDC formations met this morning in consultation over the setting up of government but failed to conclude their consultation," Mugabe's spokesman George Charamba said in a statement.

"However, they decided that there should be further consultation at the level of their negotiating teams exclusively over the ministries of finance and home affairs."

Officials said Mugabe and Tsvangirai were expected to meet again early next week.

"This is an indication that we may get an agreement sooner than we expected," Lovemore Madhuku, chairman of the National Constitutional Assembly (NCA), a political pressure group, said.

Talks between Mugabe's ruling ZANU-PF and the MDC have reached an impasse over who will control key ministries in a unity government to be established under the power-sharing deal agreed on September 15.

A senior government official earlier declined to specify when an agreement was expected or whether there was pressure from former South African President Thabo Mbeki -- who is mediating in the Zimbabwe crisis -- to form a government.

"I don't think we should be speculating. An agreement will be reached when the outstanding issues have been resolved," he said.

The opposition accuses Mugabe's party of trying to assign it a junior role in government and says only mediation can break a deadlock in talks on forming a cabinet.

ZANU-PF said it saw no immediate need for mediation and Mugabe had expressed confidence the cabinet would be named this week. Tsvangirai and his officials say a deal is not imminent.

Officials from both Tsvangirai's main MDC party and Mutambara's faction declined to comment on the talks.

A meeting between Mugabe and Tsvangirai on Tuesday failed to produce a breakthrough, raising fears the deal could break down.

Without a breakthrough, Zimbabwe's economy could worsen still further. The once-prosperous nation is crumbling under inflation of about 11 million percent -- the highest in the world -- and chronic food shortages.

(Additional reporting by Serena Chaudhry in Johannesburg; Editing by Andrew Dobbie)