World leaders signaled on Tuesday that a long-awaited global trade deal could soon be within reach, reviving some hopes that the Doha trade talks may finally move beyond years of deadlock and discord.

"Brazil will spare no effort for a successful conclusion of those negotiations, which must above all benefit the poorest countries," Brazilian President Luiz Inacio Lula da Silva told the United Nations General Assembly in New York.

"What I can tell you is that we are closer to a breakthrough than ever before ... I am convinced that we can close this deal still this year, for the joy of all of us," he later told reporters.

Strong words of support from Lula, U.S. President George W. Bush and Indian Trade Minister Kamal Nath -- some of the leading players in the World Trade Organization talks -- came as negotiators report slow, steady progress in efforts to reach a real breakthrough.

The talks, which began in 2001 in Doha, Qatar, have been mired in acrimony over issues often pitting rich nations against poor and putting Washington on the defensive over generous farm supports.

Bush, also speaking at the United Nations, shared Lula's optimism that a "good Doha agreement" was within reach, but he squarely shifted much of the burden to other countries.

"The world's largest trading nations, including major developing countries, have a special responsibility to make the tough political decisions to reduce trade barriers," he said.

"America has the will and flexibility to make those necessary decisions ... I urge other leaders to direct their negotiators to do the same," he added.

Last week, negotiators wrapped up the latest round of farm talks in Geneva.

BRIGHTER PROSPECTS

One senior U.S. trade official, speaking anonymously, described India's engagement in those talks as "constructive," a marked shift from recent months when the two countries squared off over farm subsidies and Washington's demands for lower industrial tariffs in emerging economies.

"There is a greater comprehension of India's sensitivities, comprehension that was not there before," said India's Nath, in New York for a U.S.-Indian business summit. "On manufacturing tariffs, we have flexibility and in the end we have to see what is a package deal," he added.

But India and Brazil show few signs of backing down on demands to bring U.S farm subsidy limits far lower than its official offer of $22.5 billion a year.

The mood has brightened recently after reports Washington would be willing to discuss capping subsidies as low as $13 billion, provided other countries make their own concessions.

Another top Indian official, Commerce Secretary Gopal Pillai, pressed the United States to go even farther and lower its subsidy cap below $11 billion -- where spending has been in the past year or so. He also said the talks needed to devote more attention to other trade issues, like services.

But a reduction of that order could threaten to torpedo a deal in the U.S. Congress, where agriculture holds wide sway.

Pillai, who described a "tremendous sense of urgency" in Geneva and said he was 75 percent optimistic a deal could happen in 2008, said top negotiators could gather for a ministerial meeting around March 2008 if things go well.

Still, some close to the Geneva negotiations say consensus on even technical issues is still elusive. Timing is likewise tricky. Many believe the 2008 U.S. presidential campaign could drown the round if a breakthrough doesn't occur soon.

A senior official in Europe said a balanced agreement could still be done, despite difficulties Bush might face in pushing a deal through the Democrat-controlled Congress.

"I believe such a deal is within grasp, and therefore I would be very surprised if the U.S. Congress should say no," said David O'Sullivan, the head of the European Commission's trade directorate in Brussels.

Not all observers were as hopeful. "The reason you have mixed messages is because everyone wants a deal, there is some minor movement, and so the spin is positive," said Gary Blumenthal, a former farm and trade official in Washington.

(Additional reporting by Daniel Bases in New York, William Schomberg in Brussels and Doug Palmer in Washington)

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