Just hours left to secure a Brexit deal before EU summit

The European Union gave Britain until the end of Tuesday to work out a Brexit deal that can be approved at a leaders' summit this week but said a delay to the Oct. 31 scheduled departure date and a breakdown of talks were also still on the cards.

As the clock ticked, French President Emmanuel Macron spoke to British Prime Minister Boris Johnson, EU Brexit negotiator Michel Barnier updated the 27 remaining member states, and technical talks continued in a push to get an agreement.

The main sticking point remains the border between EU-member Ireland and the British province of Northern Ireland.

Three years after Britons voted in a referendum to quit the EU, negotiators are still wrestling with the question of how to prevent the border becoming a backdoor into the bloc's single market without erecting controls which could undermine the 1998 peace agreement that ended decades of conflict.

"Even if an agreement has been difficult, more and more difficult, it's still possible this week," Barnier told reporters in Luxembourg, where he briefed EU ministers.

Barnier also said he saw three possible scenarios ahead - a deal on Tuesday, a Brexit delay, or a breakdown of talks.

However, Ireland's foreign minister made clear that the window of opportunity was closing, saying a deal must be done by the end of Tuesday to be put forward for approval at the summit in Brussels on Thursday and Friday.

"It is of course possible to move beyond the summit and to continue talks next week, Simon Coveney also told reporters.

Barnier told the ministers that unless a deal was done by Tuesday's end, he would recommend the summit agrees to continue talks with London.

"There is some optimism, he is trying for a deal tonight," Luxembourg's Foreign Minister Jean Asselborn said. "Otherwise, we will most probably need another summit later this month."

Finland's EU affairs minister Tytti Tuppurainen said the leaders would discuss a third extension to Britain's departure when they meet.

"All scenarios are open," she said.

If London is unable to clinch a deal, an acrimonious divorce could follow that would hit trade and business, roil financial markets and potentially lead to the United Kingdom splitting.

Even if he wins the approval of Europe's big powers, Johnson must still sell any deal to a British parliament in which he has no majority.

Johnson, a leading figure in the 2016 referendum who came to power as head of ruling Conservative Party in July, has pledged to take the country out of the bloc on Oct. 31 whether or not a withdrawal agreement has been reached.

But parliament has passed a law saying it cannot leave without an agreement and Johnson has not explained how he can get around that.

British Brexit Minister Stephen Barclay struck a positive note in Luxembourg, saying a deal was "still very possible."

As ministers met in Luxembourg, British Brexit negotiator David Frost held another round of negotiations with the EU's executive European Commission in Brussels.

"The possibility of a deal is clear," a French official said Macron and Johnson spoke. "A possibility of a deal is still not the same as having a deal."

A spokesman for Johnson said the British leader told Macron that London would work hard to secure a deal before the summit. A German government source said London had to move further to get there.

"We will work on an orderly Brexit to the last minute," German Chancellor Angela Merkel said.

The main obstacle is around customs, with London proposing that Northern Ireland stays in the UK customs area but that EU tariffs are applied on all goods crossing from mainland Britain to the island.

The EU has many doubts about the plan, saying the system is too complicated, untested and not detailed enough at this stage.

It believes the only possible deal to be had at the summit is a return to a solution - already rejected by Britain - of keeping Northern Ireland in the EU customs area.

It would require a major shift from London and Johnson will face parliament, which like the country as a whole is deeply divided over the issue, at a rare Saturday session.

The leader of parliament's lower house, Brexit hardliner Jacob Rees-Mogg, said there was enough support among British lawmakers to pass a Brexit deal.

"If there is to be a quick deal, it has to be based on the plan of Northern Ireland-only backstop," an EU diplomat said.

"It could be a mix of Northern Ireland-only and the customs partnership that had been proposed by (former British prime minister) Theresa May. With a lot of lipstick on it," said an EU official.

A third person, an EU diplomat, said the sweetener for London could be giving more say to Northern Irish authorities on trade rules in the province after Brexit - but not a veto to any one side of the political spectrum there.

Deal or no deal, the EU believes another delay to Britain's Oct. 31 departure date will be needed. Extension options range from as short as an extra month to half a year or longer. The other EU states would need to agree unanimously to grant it.

Sterling initially jumped on Barnier's early comments that a deal was still possible this week, before giving up some of those gains as EU officials said there was still a considerable way to go before reaching agreement with Britain.

The pound was last up 0.3% at $1.2643, off the highs of $1.2699.