EU to press May at summit, UK dismisses Brexit offer talk

(Adds May spokesman on report of offer, background)

By Jan Strupczewski and Elizabeth Piper

GOTHENBURG, Sweden, Nov 16 (Reuters) - European Union leaders will press Theresa May to meet their conditions soon for launching post-Brexit trade talks when she holds talks on the sidelines of a summit in Sweden on Friday, EU officials said.

The British prime minister dismissed via a spokesman a report on Thursday that she was ready to raise her offer of cash to settle London's obligations to the Union on leaving but a top EU lawmaker said he came away from a meeting with May in London optimistic that Britain was moving towards a deal with Brussels.

At the Gothenburg talks devoted to labour and social reform, May will have a chance to speak to her peers on the sidelines -- though German Chancellor Angela Merkel will skip the event. A key moment may be May's meeting before lunch with Donald Tusk, the summit chair who is overseeing the withdrawal process.

Tusk will remind May, according to an EU source, that "time is short" to deliver on hopes raised at an EU summit in October that sufficient progress would be made toward agreeing divorce terms this month that leaders would give a green light in mid-December to opening talks on the future relationship.

The Union's chief negotiator, Michel Barnier, has said he needs to hear more from Britain on three key divorce conditions, including the financial settlement, by the start of next month if the EU is to be in a position for all 27 other national leaders to trigger the second phase at a summit on Dec (Shanghai: 600875.SS - news) . 14-15.

EU officials have begun internal preparations to be able to launch trade negotiations after the summit, the source noted, but added: "Tusk will inform May that such a positive scenario is not a given, will require more work and that time is short.

"And he will ask May how the UK plans to progress on the three key issues for Phase One."

MORE MONEY?

May's spokesman described as "speculation" a newspaper report that she was planning to spend another 20 billion pounds (26 billion euros) to settle EU demands for Britain to pay its share of spending the EU has already agreed during British membership but will not actually pay out until after it leaves.

"I would say it is yet more speculation," he said. "We want to make progress as quickly as possible and we want to move onto talks about the future relationship as quickly as possible."

A further 26 billion euros would go a long way to meeting a demand that Brussels has put at around 60 billion euros. That is because May has already asked for a two-year transition period after Brexit in March 2019. That would bring in some 20 billion euros as Britain would go on contributing to the budget to retain its full membership of the European single market.

A Merkel ally in Brussels, Manfred Weber, the German leader of the centre-right bloc in the European Parliament, struck a notably upbeat tone after meeting May and other key British ministers in London on Tuesday. While insisting he had not heard concrete new proposals -- that is not his role -- he came away believing the British wanted to move toward a divorce deal.

"My main message is I am more optimistic," he told reporters. "There is progress."

As well as the Brexit "bill", Brussels also wants Britain to offer more in the way of rights for EU citizens living there and ensuring that its border with Ireland (Other OTC: IRLD - news) will remain unobstructed while also not creating a loophole in EU customs arrangements. (Reporting by Alastair Macdonald in Brussels and Paul Sandle in London; Writing by Alastair Macdonald; Editing by Robin Pomeroy)