(Adds Mbeki arrival)

By Cris Chinaka

HARARE, Oct 13 (Reuters) - Zimbabwean President Robert Mugabe has sworn in two vice-presidents ahead of talks on forming a cabinet, a government official said on Monday, a move that could further endanger power-sharing negotiations.

It follows Mugabe's allocation of important ministries to his ZANU-PF party at the weekend, angering the opposition. The MDC said it doubted mediation by former South African President Thabo Mbeki, who a Reuters witness said arrived in Zimbabwe on Monday, would get ZANU-PF to compromise.

MDC spokesman Nelson Chamisa said talks to resolve the dispute were scheduled for Tuesday.

A senior government official told Reuters: "The two vice-presidents were sworn in this morning because their positions are not in dispute."

The European Union could step up sanctions on Zimbabwe unless Mugabe sticks to the terms of the accord.

"If the agreement is not applied we shall resume our sanctions and reinforce them," French Foreign Minister Bernard Kouchner said in Luxembourg. France is EU president.

Existing EU sanctions include visa bans and asset freezes on top Zimbabwean officials including Mugabe.

Opposition Movement for Democratic Change leader Morgan Tsvangirai said on Sunday his party could walk away from a power-sharing deal he signed with Mugabe if Mbeki's latest mediation failed to end deadlock on dividing key ministries.

"The visit provides a platform and opportunity for ZANU-PF to reverse its unilateral action," the MDC's Chamisa said. "The ZANU-PF mindset is not consistent with power-sharing. It cannot be power-sharing when one party controls all key ministries."

Mbeki scored his biggest diplomatic coup last month when he nudged Zimbabwe's bitter political rivals to sign a power-sharing deal.

A government notice on Saturday showed Mugabe had allocated three key ministries to his ZANU-PF party, drawing fire from the opposition and threatening the fragile pact.

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Mugabe handed his party the ministries of defence, home affairs -- which is in charge of the police -- and finance which will be important in eventually reviving the collapsing economy.

ZANU-PF negotiator Patrick Chinamasa said there was only deadlock on the ministry of finance, but his party was committed to dialogue. He expected talks to start on Tuesday.

"As far as we are concerned, the only contentious issue is the ministry of finance. The locomotive has been too long at the station and is now warming its engine," he told reporters, referring to the paralysis that has gripped the country since the March elections.

Chamisa said there was no agreement on key ministries including justice, foreign affairs, information and local government.

Zimbabwe's economy is imploding, with the number of people in need of food aid rising by the day, adding to the woes of a country suffering staggering inflation of 230 million percent, the highest in the world.

Tsvangirai said on Sunday he would keep negotiating to try to reach an agreement but added that the country's 10 posts of provincial governors should be shared between ZANU-PF, a splinter MDC group and his party.

While the parties have been at loggerheads since the signing of the Sept. 15 pact on how to divide up 31 cabinet posts, this has angered Zimbabweans who had hoped the deal would bring an end to years of economic misery.

Under the deal, Mugabe -- in power since Zimbabwe's independence from Britain in 1980 -- retains the presidency and chairs the cabinet. Tsvangirai, as prime minister, will head a council of ministers supervising the cabinet.

ZANU-PF will have 15 seats in the cabinet, Tsvangirai's MDC 13 and a splinter MDC faction led by Arthur Mutambara three posts, giving the opposition a combined majority. (Editing by Charles Dick)

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