Harare - Powersharing talks between Zimbabwean President Robert Mugabe and Morgan Tsvangirai were due to continue Wednesday in Harare with both sides sounding upbeat about a possible breakthrough amid reports Mugabe was still continuing to threaten to form his own government.

At the end of a second day of talks in Harare mediated by South African President Thabo Mbeki on behalf of Zimbabwe's neighbours, Movement for Democratic Change 
(MDC) leader Tsvangirai said Tuesday there had been "some positive developments."

"We are hoping to finish tomorrow (Wednesday)," he said, while describing the talks as a "work in progress."

Mugabe also said there had been progress in some areas "and lack of it" in others but that the parties hoped to wind up the negotiations Wednesday.

A small offshoot of the MDC led by Arthur Mutambara that is also participating in the talks took the same line.

But the state-controlled Herald newspaper also quoted sources as saying Mugabe had threatened in the talks Tuesday to forge ahead with forming a new government by the end of the week, regardless of whether the parties had reached agreement.

Mugabe has repeatedly threatening to form a government without the MDC if Tsvangirai does not accept his terms for a deal, although the MDC has a majority in parliament.

Mbeki is reported to have brought new proposals to the table on Monday in an attempt to resolve the weeks-long deadlock.

Tsvangirai in August backed away from a draft agreement that would have made him prime minister but left Mugabe as president in control of the security services and cabinet. Tsvangirai demanded full control of government.

A source close to the talks on the Zanu-PF side said Tuesday Mbeki had proposed Mugabe and Tsvangirai co-chair the cabinet - but that Mugabe was "very unlikely" to agree. Zanu-PF has reportedly proposed that Tsvangirai chair the cabinet in Mugabe's absence only.

Zimbabwe has been mired in crisis for the past eight years since a land-grab of white-owned farms triggered an economic collapse.

The woes intensified in March when the MDC won a majority in parliamentary elections and Tsvangirai beat Mugabe in the presidential vote, but fell short of enough votes to avoid a second round.

Mugabe was declared the winner of the one-man June run-off vote that was denounced across the world.

Mbeki, who has been mediating in Zimbabwe for eight years, is anxious to secure a deal before he steps down after two terms as president next year. (dpa)