Zimbabwe rivals 'close to deal'

Mr Mugabe has threatened to form a government alone if no deal is reached

Power-sharing talks in Zimbabwe will resume on Thursday with cautious optimism on both sides about a deal.

"We are hopeful of signing tomorrow," Mr Mugabe told reporters as he emerged from a hotel in Harare on Wednesday.

Mr Tsvangirai, the head of the Movement for Democratic Change (MDC), meanwhile said that "very little is left".

Despite this public optimism, Zimbabwe's state-run Herald newspaper said the prospects of a deal being signed this week were "slim".

On Thursday, however, Mr Mugabe was less upbeat.

"We have not gone anywhere. We are still stuck at the same point where those from the Movement for Democratic Change still want to govern," he told a meeting of traditional chiefs, reports the AFP news agency.

"They want Mugabe to go," he said. "Where should I go? I can't go anywhere."

South Africa's President Thabo Mbeki has stayed in Harare to mediate in the talks, which had resumed on Monday, delaying a summit in Swaziland.

In a sign of Zimbabwe's economic crisis, some shops will be allowed to sell goods in foreign currency, the government has announced.

With annual inflation running at an official 11,000,000%, the Zimbabwe dollar is rapidly depreciating. Last month, the currency was revalued, so that Z$10bn became Z$1.

Security role

Asked by reporters if he was hopeful of a deal after the power-sharing talks at the Rainbow Towers hotel ended on Wednesday evening, Mr Mugabe said: "Yes, I hope so, I hope so."

"So far the progress is encouraging, so far so good," he added.

Mr Tsvangirai said President Mbeki had advised him that very little work remained before an agreement could be signed and a national unity government formed.

Mr Tsvangirai gained more votes than Mr Mugabe in March's presidential poll

"I've been advised by the convener that very little work is left... the position is that we have been advised by the facilitator that we re-convene at 4pm [1400 GMT on Thursday]," he said.

The BBC's Jonah Fisher in Johannesburg says it is very hard to predict when and if a deal will be reached, there have been so many hitches in this eight-week, stop-start process.

The Herald cited insiders at the talks suggesting that there had been little progress on Wednesday.

Earlier, it had reported that Mr Mugabe, Mr Tsvangirai and Arthur Mutambara, head of a breakaway MDC faction, held individual talks with Mr Mbeki on Tuesday before sitting down together.

Sources in Mr Tsvangirai's Movement for Democratic Change (MDC) say they are now proposing that he be named prime minister, with full authority over all the ministers, while President Mugabe chairs a new National Security Council.

This would mean he keep some authority over the security forces.

Several Zimbabweans security chiefs have said they would refuse to take orders from Mr Tsvangirai, who they see as being a Western stooge.

The MDC and human rights groups have accused the army of spearheading a campaign of violence against opposition activists ahead of June's presidential run-off.

Mr Mugabe has threatened to form a government alone if a deal is not reached this week.

Donors have been withholding aid to rescue the collapsing economy until the opposition are given real power in government.

Talks between the government and the MDC in August broke down after they agreed that Mr Tsvangirai would be named prime minister while Mr Mugabe remained president, but failed to agree on how to share powers.

The MDC leader gained more votes than Mr Mugabe in March's presidential election but official results say he did not pass the 50% threshold for outright victory.

Mr Tsvangirai pulled out of the June run-off, saying some 200 of his supporters had been killed and 200,000 forced from their homes in a campaign of violence led by the army and supporters of the Zanu-PF.

Zanu-PF has denied the claims and accused the MDC of both exaggerating the scale of the violence and being responsible for it.