By Cynthia Johnston and Mohamed Sudam
SANAA (Reuters) - Talks to end a standoff over Yemeni President Ali Abdullah Saleh's rule have stopped without a plan to resume, opposition figures said on Sunday, as clashes erupted between the army and militants in the south.
Saleh, who has been alternately conciliatory and defiant, vowed there would be no more concessions to the opposition, who are demanding he step down after 32 years of authoritarian power in the impoverished Arabian Peninsula state.
But in a sign that the political back-and-forth on a transfer of power may not be completely dead, the ruling party's governing committee recommended forming a new government to draft a new constitution on the basis of a parliamentary system.
"Yesterday evening they stopped," an aide to General Ali Mohsen, who has sided with protesters demanding Saleh's ouster, said of the talks. Asked if he anticipated talks would resume, he said: "Until now, absolutely not."
A spokesman for Yemen's main opposition coalition also said the talks had been halted, a development that if it continues would likely raise fears that violence between rival military units could replace the political process.
There was no immediate comment from the government.
Saleh, under pressure from tens of thousands of Yemenis protesting in the streets, convened a meeting of the governing committee of his General People's Congress party on Sunday for a briefing on the status of the dialogue.
At the meeting, members pleaded with Saleh to stay in power until 2013, when his term expires, a party source said. One of Saleh's first concessions when protests began in February was to say he would not seek another period in office beyond that date.
Saleh has said he was prepared for a dignified departure but that opposition parties were hijacking the protests to demand he quit without organizing a democratic handover.
"I could leave power ... even in a few hours, on condition of maintaining respect and prestige," Saleh told Al Arabiya television. "I have to take the country to safe shores ... I'm holding on to power in order to hand it over peaceably."
But he has seemed to suggest he would stay at least for the short term, sprinkling the interview with warnings that Yemen would slide into civil war and fragment along regional and tribal lines if he left power immediately.
Later, he complained he had already offered many concessions but that the demands of the opposition were never-ending.
"We didn't give concessions for the sake of concessions. But to have Yemen avoid the consequences of war. From now, we will not offer more concessions," he told the ruling party.
In continued unrest, angry protesters set fire to a bank office in the eastern port of Mukalla after security forces attacked a funeral procession held for a man killed in earlier protests and injured three marchers, residents said.
Militants clashed with the Yemeni army in a southern town, feeding Western and Saudi fears the country could slide into chaos that would benefit a resurgent Yemen-based regional arm of al Qaeda if Saleh is forced out.
The army tried to dislodge a coalition of Islamists from Jaar in Abyan province after they seized buildings on Saturday and security forces appeared to have deserted the town of several hundred thousand.
One soldier was killed on Sunday and jets flew over the town. But residents said militants appeared to have taken control and the army was withdrawing to Abyan's provincial capital, Zinjibar, where witnesses said security measures had been tightened after militants fired rockets at state buildings.
Five soldiers were killed on Saturday in an ambush in Lowdar, also in Abyan, which officials blamed on al Qaeda.
Washington and top oil producer Saudi Arabia have long seen Saleh as their man to keep al Qaeda from expanding its foothold in a country many political analysts say is close to collapse.
Yemen's al Qaeda wing claimed responsibility for the foiled attempt in late 2009 to blow up a jetliner bound for Detroit and for U.S.-bound cargo bombs sent in October 2010.
With central government control weak, Saleh's government has relied on tribal allies to maintain order, but has faced in recent years rebellions from Zaidi Shi'ites in the north and a separatist movement hoping to recreate the South Yemeni state that united with the north under Saleh's rule in 1990.
More than 80 people have been killed since protests started in January, inspired by popular revolts in Tunisia and Egypt, to demand the departure of Saleh, who has outlasted civil war as well as separatist, rebel and militant campaigns since 1978.
Opposition parties have been talking to Saleh about a transition but have so far rebuffed any of his concessions. Last week he offered to step down within a year after organizing a new constitution, parliamentary then presidential elections.
"We still have a very big gap," said Yassin Noman, rotating head of an opposition coalition. "I think he is maneuvering."
The tide appeared to turn against Saleh after March 18 when plainclothes snipers loyal to the president fired into an anti-government crowd, killing 52 people.
The violence led to defections of military commanders such as General Mohsen, ambassadors, lawmakers, provincial governors and tribal leaders, some from Saleh's own tribe.
Saleh said the defections were mainly by Islamists and that some had returned to him. He said Mohsen had been acting emotionally because of Friday's bloodshed but that security forces were not behind the deaths.
A source close to Mohsen said he and Saleh had weighed a deal in which both would leave Yemen along with their relatives to pave the way for a civilian transitional government.
Saleh said on Al Arabiya he had held meetings in recent days with Mohsen and opposition figures at which the U.S. ambassador was present, but denied any intention of quitting the country.
"I'm not looking for a home in Jeddah or Paris," he said.
U.S. officials have expressed concern over the question of who would succeed him in the country of 23 million, which has an acute water shortage and dwindling oil reserves. (Reporting by Cynthia Johnston; additional reporting by Mohammed Mukhashaf in Aden; Writing by Reed Stevenson and Andrew Hammond; Editing by Mark Heinrich)