Germany and the United States get what may be their last chance to save Opel on Friday when they try to put a heated row behind them and forge a plan to shield the carmaker from a bankruptcy of its parent General Motors.

A first round of talks that began in Berlin on Wednesday evening and ended 12 hours was described as a disaster by German participants.

The United States government balked at Germany's plan to place Opel assets in a trust while a deal with a suitor was finalised and GM shocked negotiators with a surprise request for $500 million to fill a gaping funding hole.

That infuriated Berlin, which refused to release 1.5 billion euros in temporary financing it has pledged to Opel, a company based in Ruesselsheim near Frankfurt that employs 25,000 staff in Germany and has been under GM's wing for 80 years.

The governments, GM and the two remaining suitors for Opel, Italy's Fiat and Canada's Magna, will try to clinch a deal on Friday that eluded them at the marathon session in Angela Merkel's Chancellery building.

Time is of the essence. On Thursday, GM announced it had reached a debt-for-equity swap with major bondholders, the clearest sign yet that bankruptcy is imminent.

Germany wants Opel's assets in the trust to shield them from GM creditors once it files for Chapter 11.

The goal of the Americans is to get as much money as they can from the Europeans, German Economy Minister Karl-Theodor zu Guttenberg told ZDF television. My goal is to prevent German taxpayer money from flowing to the United States.

DEADLINE FOR DEAL

Berlin has set a deadline of 2 p.m. (8 a.m. EDT) on Friday for Fiat and Magna to reach preliminary deals with GM and the U.S. government that would allow it to free up the bridge funds. If deals are struck with one or both suitors, negotiations with all parties will resume at 4 p.m. (12 p.m. EDT).

Magna executives were holed up with GM representatives at the Adlon hotel near the Brandenburg Gate on Thursday in a bid to seal an agreement before Friday's deadline.

The Canadian car parts group, started by Austrian emigre Frank Stronach in a Toronto garage nearly half a century ago, wants to use Opel to make a push into the Russian market.

It is favored over Fiat by many in the German government and may have boosted its chances by offering to help cover the $500 million requested by GM during the failed late night talks.

Magna co-Chief Executive Don Walker told Reuters in Canada on Thursday that Magna could even opt to collaborate with Fiat if such a step proved to be a win-win solution.

We have given both bidders an equal shot, Guttenberg said. Let's see who comes up with the best offer.

Should the talks fail again, Guttenberg has said insolvency is an option. Merkel, who faces an election in four months time, will want to avoid any step which might lead to mass job losses.

But she is under pressure from conservative allies to follow through on the insolvency threat if Washington does not provide Berlin with guarantees that German taxpayers will be protected.

The transatlantic strains over Opel come a week before U.S. President Barack Obama is due to visit Germany and meet Merkel in Dresden.

(Writing by Noah Barkin, editing by Tim Pearce)

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