DUBAI/ISLAMABAD, April 30 (Reuters) - Leaders of Pakistan's
coalition parties made progress in talks to save the month-old
government on Wednesday but will meet again on Thursday to try
and resolve remaining issues, officials said.
 

Former Prime Minister Nawaz Sharif rushed to Dubai to meet
Asif Ali Zardari after their aides failed to settle differences
over reinstating judges deposed by President Pervez Musharraf
during a period of emergency rule six months ago.
 

Some officials of Sharif's Pakistan Muslim League (Nawaz),
or PML (N), have hinted their ministers could quit Prime
Minister Yousaf Raza Gilani's cabinet over the matter.
 

Any coalition cracks would heighten concern that
nuclear-armed Pakistan, a U.S. ally under Musharraf, will suffer
prolonged political instability at a time of challenges from
Islamist militants and acute economic problems.
 

Sharif, overthrown by Musharraf in a 1999 military coup,
wants the judges to be reinstated immediately as part of a
strategy to drive Musharraf from office but the PPP leadership
would like to avoid an early confrontation with the president.
 

"A lot of progress has been made ... There is consensus on
most issues but difference of opinion on some legal and
constitutional matters," Chaudhry Nisar Ali Khan, a senior
minister and close aide to Sharif, told reporters in Dubai.
 

"The fact of the matter is that a final decision on the
issue will be made tomorrow and I can say that very
categorically," Khan said at the hotel where the two sides met
for seven hours.
 

Having defeated Musharraf's allies in a parliamentary
election in February, Zardari -- who succeeded his late wife
Benazir Bhutto as head of the Pakistan People's Party (PPP) --
forged a post-election alliance with Sharif.
 

REVIVE CHALLENGES
 

Restoration of the judges could revive challenges to
Musharraf's re-election by the last parliament while still army
chief. The coalition parties aim to amend the constitution to
strip Musharraf of presidential powers to dismiss the
government, but Sharif and Zardari differ over how fast to move.
 

The two vowed the PPP-led government would pass a resolution
in parliament to bring back 60 judges within a month of the
coalition taking office. The deadline passed on Wednesday, with
Zardari in Dubai where he had gone to see his daughters.
 

The PPP harbours reservations about some judges, notably
Iftikhar Chaudhry, the Supreme Court Chief Justice whose
defiance of Musharraf last year galvanised the opposition.
 

Analysts say the PPP is cautious about restoring Chaudhry
because last October he had admitted legal challenges to a
pardon that Musharraf granted Bhutto and Zardari to allow them
to return to Pakistan without fear of prosecution in a slew of
graft cases they maintained were politically motivated.
 

The PPP wants to link reinstatement of the judiciary to a
constitutional reform package that will include measures to
shorten the tenure of senior judges.
 

Under such a formula, Chaudhry could be reinstated with
honour and then immediately packed off to retirement.
 

The alliance between the PPP and PML-N marked the first time
Pakistan's two mainstream parties have come together to assert
civilian rule in a country that has been run by generals like
Musharraf for more than half the 61 years since its formation.
 

Optimism over the political outlook after the February vote
had helped the Karachi stock market hit a record high on April
21, but the index  has since lost over three percent as
investors registered worry over the deadlock on the judges.