As the two sides squabbled, to the dismay of many ordinary Kenyans, Finance Minister Amos Kimunya said the violence could cost the country up to $1 billion.

Opposition leader Raila Odinga and President Mwai Kibaki are under heavy international pressure to meet face-to-face but they appear to remain divided over how this can happen.

Kibaki has said he is ready to form a government of national unity after his disputed re-election in the December 27 poll.

But Odinga says Kibaki stole the election and must renounce the presidency, hold talks through an international mediator and enter a "transitional arrangement" prior to a new vote.

The head of the African Union, Ghanaian President John Kufuor, was due in Nairobi on Tuesday night to start talks, which Odinga sees as a a major breakthrough.

But the Kenyan government, which has resisted international mediation, said Kufuor would leave on Wednesday, and invited Odinga to its own talks on Friday.

Odinga's opposition Orange Democratic Movement (ODM) said it would reject any talks with Kibaki without a mediator.

"Mr Odinga has categorically ruled out any bilateral meeting with Mr Kibaki unless it is conducted through an international mediator," said the opposition leader's spokesman, Salim Lone, in response to the Friday invitation.

Odinga called off nationwide protests planned for Tuesday to allow time for mediation to work, but says they will resume if negotiations fail.

Asked about the cost of nine days of mayhem in Kenya since Kibaki was sworn in, Kumunya told Reuters: "My estimate was about $1 billion may have been lost."

ECONOMY DAMAGED

One of the worst crises since Kenya's independence from Britain in 1963 has damaged east Africa's biggest economy and badly hit a swathe of countries dependent on Mombasa port.

The crisis disrupted trade in the currency and stock markets and forced a postponement in the weekly tea and coffee auctions.

U.S. President George W. Bush welcomed Kufuor's visit to Nairobi and urged both sides to enter the talks in good faith to regain the trust of the Kenyan people.

"I condemn the use of violence as a political tool and appeal to both sides to engage in peaceful dialogue aimed at finding a lasting political solution," Bush said in a statement.

On Tuesday, five former African presidents, including Joaquim Chissano of Mozambique, were due to tour the western town of Eldoret, in the area worst hit by ethnic killings.

Relatives were still retrieving bodies in the Rift Valley.

"I'm waiting to find my brother," said Robert Ruto, 22, through a piece of cloth wrapped around his nose and mouth.

Aid agencies were erecting makeshift plastic tents in fields and rushing food, blankets, medicines and water to tens of thousands displaced by the conflict. Many are sleeping outdoors in the cold after their houses were burned down.

In her first public comments since arriving Friday, Washington's top diplomat for Africa said the crisis had not shaken U.S. confidence in Kenya as a strong regional hub but she issued a stinging rebuke to political leaders.

"It has actually further deepened our sense that Kenya is a strong regional partner," U.S. Assistant Secretary of State Jendayi Frazer told a news conference on Monday.

She said Kenyans had come together to "haul themselves back from the brink," but "they have been cheated by their leadership and their institutions".

Odinga had looked on course to win the December 27 ballot until Kibaki, 76, was handed a narrow victory. Both sides alleged widespread rigging and international observers say the poll fell short of democratic standards.