The United Auto Workers (UAW) union has made much progress toward reaching a new contract with General Motors Co to replace a deal on wages and benefits that expires just before midnight on Wednesday, a senior union official said.

We are confident that we can reach an agreement that will meet many of the goals we set at the beginning of negotiations, UAW Vice President Joe Ashton said in an electronic update on negotiations for the 49,000 union-represented workers at the top U.S. automaker.

The comments from Ashton represented the most upbeat assessment from the union since negotiations entered a more intensive phase over the past week.

Ashton said the union's goal was to reach a tentative contract deal with GM, rather than face arbitration.

The union was barred from calling a strike at GM under the terms of the automaker's restructuring in its 2009 bankruptcy funded by the Obama administration.

Our negotiations with management have reached a critical stage as we near the expiration of the national agreement, Ashton said.

A day earlier, Ford Motor Co and the UAW agreed to extend their contract to allow for the union to reach an initial deal with GM or Chrysler Group LLC.

Negotiations in Detroit between GM and Ashton's UAW negotiating team broke off around 11 p.m. on Tuesday night, a person familiar with the talks said.

Talks continued at Chrysler late the night on Tuesday. The union's Chrysler negotiating team said it was working tirelessly to reach a deal in an update on its Facebook page.

In these talks, which will set wages and benefits for about 113,000 workers for the next four years, the companies are focused on keeping labor costs down. The UAW is angling for more auto production jobs in the United States as well as one-time bonuses because of the industry's improved profitability.

The negotiations are being watched by investors as an indication of how much Detroit has changed since the steep downturn and sharply tighter financing that almost forced GM and Chrysler out of business in late 2008 and threatened Ford.

GM Chief Executive Dan Akerson and Vice Chairman Steve Girsky have been involved in the GM talks over the past week, people with knowledge of the proceedings have said.

Chrysler Chief Executive Sergio Marchionne left the Frankfurt auto show on Tuesday night to return to Detroit, a source said.

If the deadline is not met, the union and the company teams would have to agree to extend the current contracts, which is seen as a routine matter, analysts have said.

GM has about 49,000 UAW-represented workers, Ford has about 41,000, and Chrysler, controlled by Italy's Fiat SpA, has about 23,150.

(Additional reporting by Kevin Krolicki in Detroit and Silvia Aloisi in Frankfurt;Editing by Hans-Juergen Peters)

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