By Ana Isabel Martinez and John McPhaul
SAN JOSE, Costa Rica (Reuters) - Talks to resolve Honduras' political crisis dragged into a second day on Sunday, with negotiators for deposed President Manuel Zelaya and coup leaders deadlocked over his proposed return to power.
Both sides at the talks in the Costa Rican capital appeared to agree over the creation of a coalition government for Honduras but one major stumbling block remained -- Zelaya's reinstatement as president.
Zelaya, a leftist, was ousted in a June 28 military coup, and the de facto government led by Roberto Micheletti has so far resisted all international pressure, refusing to accept any deal that includes Zelaya being restored to power.
Costa Rican President Oscar Arias, a Nobel Peace Prize winner, is leading the U.S.-backed mediation efforts and proposed on Saturday that Zelaya be allowed to return to form a coalition government giving his rivals a share of power.
Micheletti's team agreed on Sunday to a coalition government but said it would only agree to let Zelaya back in the country if he faced charges for alleged political crimes.
The de facto government has resisted international pressure to hand power back to Zelaya and has put the army on high alert at key points across the country in case he tries to return.
Zelaya, who is in exile in Nicaragua, is pledging to return to Honduras even if the talks fail. He believes time is running out for a diplomatic solution.
"If they don't accept his reinstatement, I'm afraid the time for dialogue will end and the president will see how he plans to enter Honduran territory," a close aide to Zelaya's family said on condition of anonymity.
VIOLENCE
A previous attempt to land in the capital was blocked by the military and sparked violent clashes between his supporters and soldiers that left one protester dead.
The U.S. government is pushing for Zelaya's return to office but is worried that he could trigger more violence if he tries to go home without a negotiated settlement.
"We are indeed concerned about him going back," said a U.S. official, adding that Assistant Secretary of State Thomas Shannon "is in practically daily contact with him, urging him to allow (the) Arias process to play out."
Honduras' army toppled Zelaya, whisking him out of the country on a plane on orders from the Supreme Court. Critics accused him of violating Honduras' constitution by seeking to extend presidential term limits.
Zelaya had upset Honduras' business elite and moderates in his own Liberal party by veering to the left after taking office in 2006 and allying himself with Venezuela's Hugo Chavez, a fierce critic of the United States.
Chavez was set to meet Zelaya in the Nicaraguan capital of Managua on Sunday for an anniversary celebration of a leftist revolution in 1979.
Zelaya's regional allies could use the event to ramp up threatening rhetoric. Soon after the coup, Chavez said he had put Venezuela's troops on alert.
Micheletti's government hopes to stave off international demands for Zelaya's return but economic pressure could weaken its hold on power.
International port workers unions have called for a boycott of Honduran flagged ships in support of Zelaya, potentially hitting key coffee and textile exports from the impoverished country. Multinational lenders halted aid programs and the U.S. government suspended military cooperation after the coup.
The Organisation of American States and the U.N. General Assembly have called for Zelaya's return to power and no foreign power has recognized the interim government.
Zelaya supporters have kept up pressure inside the country by organizing protests nearly every day since his ouster. On Sunday, they planned to march in the western town of Santa Barbara, a stronghold of Zelaya's Liberal Party.
(Additional reporting by Simon Gardner, Esteban Israel, Gustavo Palencia and Juana Casas in Tegucigalpa and Arshad Mohammed in Mumbai; Writing by Louise Egan)
