Annan eyes Kenya political breakthrough in days

NAIROBI (Reuters) - Kenya's feuding political parties have made progress and may reach a breakthrough within days on their major sticking point over a disputed December 27 election, former U.N. boss Kofi Annan said on Friday.

"I sincerely hope that we will conclude our work on item three, the settlement of the political issues, by early next week," said Annan, who is mediating the dispute.

"We are all agreed a political settlement is necessary with a little patience and a bit of luck." He gave no details on the progress made.

Negotiators for President Mwai Kibaki and opposition leader Raila Odinga have already agreed on principles to stem violence and help refugees, but had been stuck this week on the crucial dispute over the tallying of the December ballot.

Odinga's Orange Democratic Movement (ODM) says Kibaki supporters rigged the vote. Kibaki's Party of National Unity (PNU) says the opposition cheated in its heartland and points to the election board's announcement Kibaki had won.

Annan has given both sides until mid-February to resolve that and said they should tackle deeper underlying issues like land and wealth inequality within a year.

He dismissed speculation in local media that the parties had reached an agreement on sharing power in a government of national unity. "Please don't pay much attention to the speculations and the rumors," Annan said.

Officials on both sides declined to give details of the progress in negotiations but said talks were moving forward.

(Reporting by Andrew Cawthorne and Duncan Miriri; editing by Robert Woodward)