The African Union chairman headed to Kenya on Tuesday to help end turmoil that has killed almost 500 people, but hopes of a swift breakthrough seemed to falter.

Despite huge international pressure, especially from Western powers, President Mwai Kibaki and opposition leader Raila Odinga have still not met face-to-face since violence erupted after Kibaki's disputed re-election on December 30.

Odinga says mediation by AU chairman John Kufuor, the Ghanaian president, is the only way to end the chaos. He says Kibaki stole the December 27 election and must step down and make way for a new vote after a transitional period.

Kufuor left Accra on Tuesday and was due later in Nairobi.

But Kibaki, who has offered a government of national unity, is reluctant to accept mediation and has invited Odinga to alternative talks on Friday. Officials here said Kufuor would leave after barely 24 hours.

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.

Odinga called off nationwide protests to allow time for mediation to work, but says they will resume if it fails.

He says police have killed hundreds during protests.

ECONOMIC COST

As the two sides squabbled, to the dismay of many ordinary Kenyans, Finance Minister Amos Kimunya told Reuters he estimated the turmoil could have cost east Africa's biggest economy around $1 billion.

One of the worst crises since Kenya's independence from Britain in 1963 has also badly hit a swathe of central and east African countries dependent on Mombasa port on the Indian Ocean.

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

"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.

Britain also pressed Kibaki and Odinga to find a solution.

Foreign Secretary David Miliband told parliament Kufuor "needs Kenyan leaders ready to engage. Fail to compromise and they will forfeit the confidence, goodwill and support of their own people and the international community".

Jendayi Frazer, Washington's top diplomat for Africa, also issued a stinging rebuke to political leaders.

Kenyans "have been cheated by their leadership and their institutions", she said.

On Tuesday, four former African presidents, including Joaquim Chissano of Mozambique, visited the western town of Eldoret, in the area worst hit by ethnic killings.

They told refugees they were pressing for peaceful negotiations so they could return home. Officials say 255,000 people have been displaced by the violence.

Relatives were still retrieving bodies in the area.

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

Faith Wairimu broke down in sobs as she stumbled across her husband's dismembered body in a field late on Monday. He was hacked to death in the same attack near Eldoret in which 30 people were burned to death in a church.

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

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