German efforts to forge a rescue for General Motors unit Opel were under threat on Friday after Italy's Fiat said it would skip crucial talks and a source said frustration was rising at rival bidder Magna.

Germany and the United States get what may be their last chance to shield Opel from a looming GM bankruptcy on Friday after a first round of talks collapsed amid mutual recriminations.

In those talks, the U.S. government balked at Germany's plan to place Opel assets in a trust while a deal with a suitor was finalized. This infuriated Berlin, which refused to release 1.5 billion euros in bridge financing for Opel.

Germany has set a 2 p.m. (8 a.m. EDT) Friday deadline 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.

But Fiat Chief Executive Sergio Marchionne said in a statement early on Friday that his company had not been granted full access to Opel's financial records and was not in a position to frame a proper merger proposal.

The last round of requests which would require Fiat, among other things, to fund Opel on an emergency basis while the German government determines the exact timing and conditions of the interim financing, would expose Fiat to unnecessary and unwarranted risks, Marchionne said.

We remain committed to finding ways to bridge the expectations of both General Motors and the German government but the emergency nature of the situation cannot put Fiat in a position to take on extravagant risks.

Based on this, Marchionne said Fiat would not attend the meeting in Berlin, although he said his company remained committed to doing a deal with Opel.

Separately, a source close to the negotiations said Magna and GM had come close to a basic agreement in talks that dragged on into the early morning hours of Friday, but that the Canadian car parts group was growing increasingly frustrated with new demands from GM.

The hopes of getting an agreement are vanishing by the minute, said the source.

The setback means the likelihood of an insolvency for Opel has risen. 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 the parent files for Chapter 11, but first it must win U.S. approval and be sure a deal with one of the bidders is possible.

Should the talks fail, German Economy Minister Karl-Theodor zu 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.

She was quoted by Spiegel Online on Friday as saying Germany would do its utmost to avoid an Opel insolvency.

Based in Ruesselsheim near Frankfurt, Opel employs 25,000 staff in Germany and has been under GM's wing for 80 years.

Excluding Saab, GM Europe employs a total of 50,000 workers. It has car manufacturing plants in Spain, Poland, Belgium and Britain, where Opel cars are sold under the Vauxhall brand, as well as engine and parts sites such as Aspern near Vienna.

(Additional reporting by Ian Simpson in Milan, Madeline Chambers in Berlin)

(Writing by Noah Barkin; Editing by David Cowell)

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