General Motors Co and Magna International Inc have narrowed their differences in talks over the Canadian supplier's bid for Opel and only a small number of issues are still pending, German politicians said on Wednesday.

Magna is locked in a battle for European carmaker Opel with Belgium-based financial investor RHJ International SA, but GM has yet to make clear its preference.

Germany, which is set to provide state aid to Opel, and GM have to agree on a buyer for Opel, but there has until now been no sign of consensus, with German politicians sounding far more enthusiastic about Magna's bid.

GM and Magna have moved closer together. A good deal of the critical points have been settled, Hendrik Hering, economy minister for the state of Rhineland-Palatinate, which houses an Opel factory, told Reuters.

His comments echoed comments from other officials after a round of talks on Tuesday.

The four German states with Opel plants are closely involved in negotiations on the carmaker's future and have offered bridge-financing to keep it afloat until a partner is found.

The next step is for GM's board to make a formal recommendation on a bidder. Then the Opel Trust, comprising GM and German representatives, has to approve the buyer.

GM Chairman Ed Whitacre said talks on Opel were ongoing.

We expect a resolution in the near future, Whitacre told reporters on a conference call.

He was speaking after GM's board convened in Detroit for the first time since the automaker emerged from bankruptcy.

Whitacre declined to say whether GM would consider liquidation for Opel or whether a refinanced Opel might present a competitor to the Detroit-based automaker in emerging markets.

Magna, which has teamed up with Russian state-controlled bank Sberbank and automaker GAZ for its bid, wants to expand Opel's full-scale car assembly business and forecasts high growth rates, particularly in Russia.

GM officials have been quoted as saying the U.S. company's reservations about the Magna offer are due partly to patent concerns and its expansion plans in the Russian market.

But a German politician close to the negotiations said only three issues remained to be cleared up between GM and Magna.

From an original 26 disputed points, three remain, the source said, adding they included license fees and of how any future capital increase would be arranged because GM wanted to keep its influence.

Other issues, such as distribution rights for GM's Chevrolet brand in Russia, had been largely resolved, said the source.

RHJ aims to shrink production to return Opel to profit and may be open to selling it back to GM at a later date.

Whitacre said GM's board planned to meet again in September, but could convene by telephone before then if needed.

One source close to Magna and another close to RHJ said they expected GM to signal its preference on Friday.

A GM spokesman said that, while the automaker was still urgently pursuing an Opel deal, improving sales had given the company a cash buffer to allow negotiations to continue in the current quarter.

Germany says it aims to have the deal closed in September.

Ron Bloom, the adviser to the U.S. Treasury's auto task force, said on Wednesday the decision on how to proceed with the Opel deal would be left entirely to GM's management and board.

The U.S. government's decision to fund GM's bankruptcy gave it a 61 percent stake in the automaker, but Bloom and other administration officials have repeated the government will not use its status as majority owner to influence the outcome of business decisions.

Our role is to support GM. We are not directly involved in the negotiation. We do not expect to be directly involved in the negotiation, Bloom told reporters.

We are able to consult with our colleagues in Germany or elsewhere if they want to get our perspective, but this is a good example of this being GM's decision.

(Additional reporting by Gernot Heller and Rene Wagner in Berlin, Philipp Halstrick; writing by Madeline Chambers in Berlin; editing by Mariam Karouny and Andre Grenon)

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