VIENNA (Reuters) - Talks between Austria's two centrist coalition parties aimed at setting policy priorities and averting a government collapse are making progress, Chancellor Christian Kern said on Friday, but he canceled weekend travel plans as negotiations dragged on.
Kern, a Social Democrat, said on Tuesday he wanted an agreement by Friday on concrete policies for the remaining year and a half of the coalition's term. Failure to reach a deal by then, he suggested, might mean the end of the coalition and lead to a snap parliamentary election.
He has since retreated from those comments, saying there will be no snap election, but meetings that run into the small hours have continued as the two sides try to reach an agreement.
A snap election would most likely play into the hands of the far-right Freedom Party (FPO), which is running first in opinion polls, helped by widespread frustration with a coalition government that many voters believe is ineffective.
"Little time remains for what we hope to achieve and it could very well be that this lasts beyond the coming day," Kern told reporters as talks broke after midnight. "There was progress on some points. There was no progress on others."
A spokeswoman for Kern later said he had postponed a visit to Israel and the West Bank that was due to begin on Sunday because of the talks.
Kern, who took over as head of the government in May, has sought to project a more modern and dynamic image than his predecessor, Werner Faymann, who resigned after an FPO candidate won the first round of the presidential election.
At an event this month, Kern announced a 150-page list of proposals on issues ranging from cutting unemployment to reforming education.
Kern's junior coalition partners from the conservative People's Party have countered with their own proposals, many of them on security and immigration. They include halving a cap on asylum claims set at 35,000 for this year and banning public servants from wearing Muslim headscarves.
The government has given few details of the talks, and a spokeswoman for Kern said the situation was changing hourly. Austrian media have said other points being discussed include tax relief for employers and making working hours more flexible.
(Reporting by Francois Murphy; Editing by Larry King)