Northern Ireland political talks stall as time runs out

* Northern Ireland "on glide path" towards direct rule

* Fresh blow comes a day after Bill Clinton intervention

* Direct rule would be "devastating" blow for reconciliation (Adds Sinn Fein quotes, details on Clinton meeting)

By Andrew MacAskill and Amanda Ferguson

LONDON/BELFAST, Oct (Shenzhen: 000069.SZ - news) 18 (Reuters) - The chances of Northern Ireland (Other OTC: IRLD - news) 's political parties restoring a power-sharing agreement are "not positive" and Britain will have to impose a budget early next month if talks cannot be salvaged, the minister for the region said on Wednesday.

Northern Ireland has been without a regional administration since its collapse in January, raising the prospect of direct rule being reimposed from London, potentially destabilizing a delicate political balance in the British province.

Britain will need to draw up a budget - a move one of the region's smaller parties said would effectively constitute direct rule - if an executive is not formed by the week starting Nov. 6, James Brokenshire said.

"If I had given evidence to this committee last week I might have indicated some momentum, more progress. That progress stalled at the end of last week," Brokenshire told a parliamentary committee, adding London would also have to pass legislation by Oct. 30 to enable an executive to be formed.

"Unless there is a renewed spirit of compromise then the outlook for imminent resolution is not positive."

Former U.S. President Bill Clinton, who played a central role in brokering the 1998 peace deal that ended three decades of sectarian bloodshed in Northern Ireland, used a brief trip to Dublin this week to travel to Belfast and meet the main parties.

But the main impediment in the talks between the pro-British Democratic Unionist Party (DUP) and Irish nationalists Sinn Fein remains disagreement over improved rights for Irish language speakers, an issue that has dogged negotiations for months.

Sinn Fein's leader in Northern Ireland, Michelle O'Neill, described Brokenshire's budget comments as "not helpful in the sense that it clearly signifies that would be the end of this phase of negotiations."

Considerable challenges remain, she said.

The Irish government, which is co-facilitating the talks, has said Northern Ireland needs a devolved government to give it a greater say in Britain's negotiations to leave the European Union, set to have a bigger impact on the province than on any other part of the United Kingdom.

Ireland's foreign minister last week said reverting to direct rule from London for the first time in a decade would be a "devastating" blow for reconciliation in the province.

Brokenshire said while he has no desire to do so, all options - including direct rule - must be considered if no agreement can be reached.

"We are on a glide path to greater and greater UK government intervention," Brokenshire said. "We can't go on much longer." (Additional reporting by Padraic Halpin in Dublin; Editing by Stephen Addison and Janet Lawrence)