TEGUCIGALPA - Envoys for Honduras' de facto leaders and ousted President Manuel Zelaya resumed talks on Thursday to end a post-coup crisis, but were far from agreement on the key issue of returning the leftist to power.

The negotiations, in their second day, seek to end the conflict triggered by a June military coup that ousted Zelaya.

The standoff is Central America's worst crisis in years and has become a test for U.S. President Barack Obama after he promised a new era of engagement with Latin America.

A high level mission including the head of the Organization of American States and the top U.S. diplomat for Latin America is overseeing the talks.

The OAS mission and Zelaya's camp insist he must return to office in order to end sanctions against Honduras and legitimize presidential elections set for November 29.

De facto leader Roberto Micheletti says Zelaya should stop insisting he must retake the presidency and has criticized the diplomats who support his return.

We are very pessimistic, we don't see any positive feeling in the position of the coup leaders, said Juan Barahona, one of three members of Zelaya's delegation at the talks.

They are not considering the restitution of Zelaya, he told Reuters.

Republicans in the United States have criticized Obama for supporting Zelaya's return. The ousted leader allied Honduras with leftist Venezuelan President Hugo Chavez and communist Cuba and angered business groups.

Zelaya slipped back into Honduras two weeks ago and has taken refuge inside the Brazilian embassy with his wife and scores of followers. Troops and police in riot gear have ringed the mission to limit pro-Zelaya demonstrations.

The president's supporters have been holding small marches in Tegucigalpa every day despite emergency curbs on demonstrations imposed by Micheletti, who has also closed two media outlets that support Zelaya.

Foreign ministers and diplomats from Brazil, Ecuador, Mexico, Spain the United States and several Central American nations visited Zelaya on Wednesday in the embassy, where he sleeps on an inflatable mattress.

The envoys are due to leave Honduras later on Thursday, leaving lower level officials to observe the negotiations. (Editing by Alan Elsner)
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