(Adds Mugabe paragraph two) By Nelson Banya HARARE, Oct 15 (Reuters) - Zimbabwe's parties are close to a deal on forming a cabinet and "history is being made" in negotiations between President Robert Mugabe and rival Morgan Tsvangirai, the opposition MDC said on Wednesday. Mugabe was also upbeat, saying he expected talks aimed at rescuing a power-sharing deal to be sealed on Thursday. Arthur Mutambara, leader of a splinter MDC faction, said the parties were "very close" to an agreement. "History is being made and mountains are being moved," MDC chief negotiator Tendai Bititold reporters after Wednesday's talks in Harare ended without an agreement but the parties vowed to press on with negotiations on Thursday morning. Mugabe, Tsvangirai and Mutambara have been locked in talks for the past two days mediated by former South African President Thabo Mbeki, after the pact he brokered last month hit a deadlock over a dispute about cabinet posts. Analysts say the power-sharing pact is Zimbabwe's best hope for halting an economic meltdown which is marked by the world's highest inflation of 231 million percent and severe food, fuel and foreign currency shortages. Tsvangirai threatened to pull out of the agreement on Sunday after Mugabe allocated key ministries, including defence, home affairs -- which oversees the police -- and finance, to his ZANU-PF party. Tsvangirai said talks would restart at 0930 GMT on Thursday, adding there were still some outstanding matters. Mugabe's party lost its majority for the first time since independence from Britain in 1980 after a March 29 election which the opposition says he rigged to keep power. The rivals are under pressure to reach a settlement and international donors have pledged to pump money into the once prosperous southern African nation if a democratic government is formed and economic reforms implemented. Some analysts say Mbeki may have less leverage in Zimbabwe after being ousted as South African president by his own party last month. Under the power-sharing deal Mugabe, in power since Zimbabwe's independence from Britain in 1980, would retain the presidency and chair the cabinet. Tsvangirai, as prime minister, would head a council of ministers supervising the cabinet. The Herald newspaper, controlled by Mugabe's administration, said earlier that proposals would be tabled on leadership of the finance ministry, which is crucial to reviving Zimbabwe's ruined economy and attracting foreign investment. Citing sources, the Herald said one proposal was for a nominated finance minister to have two deputy ministers from Tsvangirai's Movement for Democratic Change and a smaller breakaway faction of the party. Another option was to appoint a neutral person to the post. (Editing by Rebecca Harrison; Editing by Jon Boyle)
Executive Secretary of United Nations Framework Convention on Climate Change (UNFCCC), Yvo de Boer of South Africa speaks at a news conference at the end of Informal High Level Consultation on ...
