Zimbabwean President Robert Mugabe downplayed the suspension of talks between his party and the opposition on a unity government, echoing South African President Mbeki in assuring the negotiations were going 'well.'

'We are still negotiating and want success... Some areas are debatable but we debate. It is not easy but I hear they are proceeding well,' Mugabe told a press conference at the Reserve Bank in Harare.

'Speaking for Zanu-PF (his party) and myself we are committed and want to see the speedy and successful conclusion of the talks so that we can focus on the turnaround of our economy,' Mugabe said.

Mugabe was speaking ahead of a meeting with Mbeki, who travelled to Harare to try to revive the stalled talks between Zanu-PF and the Movement for Democratic Change (MDC).

On Tuesday Mbeki met with MDC leader Morgan Tsvangirai in Pretoria to discuss the abrupt suspension of the talks on Monday.

MDC sources said the talks reached an impasse on the issue of who should lead the next government.

The MDC, backed by Western powers, is calling for Tsvangirai to have the leading role, given that he and his party took the most votes in multi-party March elections.

Zanu-PF says Mugabe should lead after he won the second round of voting for president in June without a contest. Tsvangirai boycotted the vote after dozens of his supporters were killed by Mugabe loyalists.

Negotiators from Zanu-PF allegedly called for time to consult with Mugabe after the MDC rubbished their offer to make Tsvangirai a third vice-president under Mugabe.

Mbeki said Tuesday the talks would resume by the weekend, but a source in a smaller MDC faction led by Arthur Mutambara, whom Mbeki was also due to meet Wednesday in Harare, said the talks would only resume next Monday after a week's hiatus. Mbeki also said the talks were 'doing very well.'

Meanwhile, in a reflection of Zimbabwe's ever-worsening economic crisis Reserve Bank governor Gideon Gono announced he was stripping ten zeroes off the battered Zimbabwe dollar.

The current 10 billion Zimbabwe dollar notes would be replaced by new one dollar notes on August 1, he said.

Mugabe used the occasion of the announcement to warn business against overcharging.

'Don't drive us further than you have done in the past. We'll impose emergency measures. but we don't want to place our country under emergency rule, which can be tough,' Mugabe warned.

Zimbabwe is crippled by hyperinflation of several million per cent that has seen the Zimbabwe dollar hurtle from 1 US to 5,300 Zimbabwean at the beginning of the year to as as much as 800 billion Zimbabwean dollars for a single greenback in the past few days.

Mugabe has accused business of profiteering by jacking up prices but business owners say they are just trying to keep their heads above water.

Most observers say the crisis began in earnest when 84-year-old Mugabe, who has ruled Zimbabwe since independence in 1980, gave the nod to ruling party members and cronies to begin seizing white-owned farms in 2000.

Gono agreed the lasting solution to inflation was to increase output, particularly agricultural output.

'We've not done enough since we started our agricultural reform,' Gono said, referring to the seizure of thousands of white-owned farms by ruling party members and cronies since 2000.

The seizures decimated commercial farming, once the country's economic mainstay.