( AP ) - U.S. envoy Jendayi Frazer was to meet again Monday with Kenya's opposition leader, who has signaled he is willing to share power with the government he accuses of rigging elections but at the same time called for mass rallies - a move that threatens renewed bloodletting.
Frazer, the assistant secretary of state for African affairs, has won an offer from embattled President Mwai Kibaki to form a coalition government and a concession from opposition leader Raila Odinga that he would negotiate without preconditions.
Frazer planned to meet Odinga Monday morning, the last day of a three-day mission, U.S. Embassy spokesman T.J. Dowling told The Associated Press.
Odinga said Sunday he was willing to drop demands that Kibaki resign and would discuss a power-sharing arrangement, but only through a mediator empowered to negotiate an agreement that the international community would guarantee.
He welcomed the imminent arrival of Ghana's President John Kufuor, current chairman of the African Union, who is expected in Nairobi by Tuesday.
Prime Minister Gordon Brown of Britain, Kenya's former colonizer, appealed on BBC Television on Sunday for the two rivals to urgently hold talks to end the political deadlock caused by allegedly flawed elections that sparked a week of riots and ethnic clashes that killed more than 300 people and forced 250,000 from their homes.
The Dec. 27 vote was only the country's second free election since independence in 1963.
The explosion of violence has damaged Kenya's image as a stable democracy and an attraction for millions of tourists in a region rent by wars, uprisings and civil unrest.
Thousands of tourists have canceled vacations at the beginning of the high season.
"Hotels have been projecting an occupancy of 80-90 percent of capacity. But today, as we speak, that has dropped down to less than 40 percent. That's a huge loss for the economy," Mohammed Hersi, general manager of Whitesands Hotel in the coastal city of Mombasa, told AP Television News.
The government postponed opening schools, which were scheduled to resume classes Monday after the holidays. Many are providing shelter to families who fled their homes.
The troubles eased over the weekend, although there have been isolated machete fights and ethnic attacks, and police fired tear gas to disperse protesters in the coastal tourist town of Mombasa.
But more clashes are likely if Odinga presses ahead with his call for supporters to rally Tuesday in defiance of a government ban. Government spokesman Alfred Mutua said any such demonstrations would be illegal.
"If there is any bloodshed during these rallies it will be the government's responsibility," Odinga told reporters.
Attempts to hold opposition rallies last week were blocked by police who fired tear gas, water cannons and live bullets over people's heads. Human rights groups accused police of excessive force and unjustified killings in the crisis, but police Commissioner Hussein Ali insisted Sunday that "We have not shot anyone."
Kibaki, re-elected by a narrow margin in a vote count that international observers say was deeply flawed, said Saturday he was willing to form a unity government.
Odinga rejected that proposal, but his spokesman Salim Lone said they would consider a power-sharing coalition government in which Kibaki need not necessarily be president.
The opposition has also proposed setting up an interim government with a mandate to hold new presidential elections. But Kibaki has said only a court could order fresh elections - an unlikely event since he has packed the judiciary with his allies.
It would be nearly impossible for Kibaki to govern without opposition support. Odinga's party won 95 of 210 legislative seats, and half of Kibaki's Cabinet lost their seats on election day - a sign of anger over pervasive corruption and nepotism that favored Kibaki's Kikuyu tribe.