(updates with Mbeki, Mutambara)

By Nelson Banya

HARARE, Oct 17 (Reuters) - Southern African officials will meet on Monday to try to help Zimbabwe's rival parties end a deadlock on forming a new government, opposition leader Morgan Tsvangirai said on Friday.

Speaking after four days of inconclusive talks mediated by former South African President Thabo Mbeki, Tsvangirai said his MDC party would not walk away from negotiations despite the difficulties.

Mbeki said an agreement was still possible.

"I wouldn't say it's a deadlock. Negotiations are continuing. The matters are capable of solution quite easily," Mbeki told reporters.

Officials from Swaziland, Mozambique and Angola, representing the Southern African Development Community, will meet in Swaziland on Monday to try to find a way of overcoming the stalemate.

"We call upon the SADC and the AU (African Union) to use their collective wisdom to help unlock the deadlock," Tsvangirai said.

The power-sharing deal brokered by Mbeki a month ago is seen as Zimbabwe's best hope for rescuing an economy where fuel and food are scarce and inflation stands at 231 million percent, the world's highest.

Mugabe, in power since 1980, said the talks were derailed.

"It went very well in the wrong direction," Mugabe told reporters.

Tsvangirai threatened to pull out on Sunday after Mugabe allocated powerful ministries such as defence, finance and home affairs to his own party.

Mugabe's long-time foe still seemed hopeful after several rounds of failed talks.

When he was asked about the atmosphere in the talks, Tsvangirai said: "There is a hurdle accepted by all the parties. There was no animosity. It was very cordial, no rancour."

Arthur Mutambara, head of the smaller MDC faction, expressed frustration, blaming Mugabe and Tsvangirai for the failure.

"I have no option but to follow these two men who have failed to agree. I saw partisanship and bankrupt ambition disrupting the discourse," he told reporters.

Tsvangirai beat Mugabe in a March 29 presidential election but fell short of enough votes to avoid a June run-off, which was won by Mugabe unopposed after Tsvangirai pulled out, citing violence and intimidation against his supporters.

Mugabe's victory in the run-off was condemned around the world and drew toughened sanctions from Western countries whose support is vital for reviving Zimbabwe's ruined economy. (Writing by Michael Georgy; Editing by Angus MacSwan)

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