WASHINGTON (Reuters) - President Barack Obama sought on Sunday to break an impasse with Republicans on how to cut the deficit and avert a debt default in an unexpectedly brief meeting at the White House.

The president's gathering with leaders of both parties came a day after Republicans shied away from a broad $4 trillion deficit-reduction deal over 10 years and urged a focus instead on a $2 trillion plan that would rely mostly on spending cuts without the tax increases that Democrats are seeking.

Congressional aides predicted late last week that Sunday's session would last four or five hours. Instead it ended after after 75 minutes.

More talks are scheduled for Monday and the White House said Obama would hold a news conference at 11 a.m. EDT before reconvening with congressional leaders.

Obama made clear at the start of Sunday's session that they were racing the clock. Asked whether a deficit-reduction deal could be reached within the next 10 days, he told reporters: "We need to."

The Treasury has said it will exhaust its borrowing capacity by August 2, meaning it will run out of money to pay all its debts. Republicans have balked at raising the congressional-set $14.3 trillion debt ceiling without steep spending cuts.

Failure to seal a deal by August 2 could put the United States at risk of another recession, Treasury officials and private economists have warned.

Investor worries about the debt ceiling were expected this week to put pressure on the U.S. dollar, which fell on Friday after a grim jobs report. In early Asian trading on Monday, the New Zealand dollar was near a 30-year high against the U.S. dollar and the Australian dollar dipped.

House Speaker John Boehner, facing a revolt from fellow Republicans over the prospect of higher taxes in a large-scale trillion budget deal, told Obama on Saturday he would only pursue a more modest package of deficit reduction.

The setback for the $4 trillion deal followed Democratic complaints to Obama -- whose 2012 re-election prospects are tightly linked to U.S. economic health -- that he should not agree to any reforms of popular entitlement programs that would lead to benefit cuts.

Christine Lagarde, the new head of the International Monetary Fund, said a U.S. default would have global repercussions.

"If you draw out the entire scenario of a default, yes, of course, you have all of that, you know, interest hikes, stock markets taking a huge hit and real nasty consequences," the former French finance minister told ABC's "This Week."

(Additional reporting by Steven Holland, Tabassum Zakaria, Jim Wolf, Thomas Ferraro, Andy Sullivan and Matt Spetalnick; Editing by Bill Trott)

Source: Reuters US Online Report Top News