General Motors and Magna 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 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. firm'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, said the source, adding they included the question of license fees and of how any future capital hike would be arranged as 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 give a signal as to its preference on Friday.

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

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

(Additional reporting by Gernot Heller and Rene Wagner in Berlin, Philipp Halstrick)

(Writing by Madeline Chambers in Berlin; editing by Mariam Karouny)

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