HONG KONG (Reuters) -CK Hutchison's ( CKHUF ) plan to sell most of its $22.8 billion ports business is unlikely to be finalised anytime soon, with political brinkmanship set to continue, and sources saying that a Sunday deadline for exclusive talks was likely to be extended.

The Hong Kong conglomerate's plan to sell the business, which would include two ports along the strategically important Panama Canal, to a consortium led by BlackRock ( BLK ) and Italian billionaire Gianluigi Aponte's family-run shipping company MSC, has become politicised amid an escalating China-U.S. trade war.

Negotiations for the deal, which covers 43 ports in 23 countries, are on an exclusive basis between CK Hutchison ( CKHUF ), controlled by Hong Kong tycoon Li Ka-shing, and the consortium for 145 days until Sunday, according to the terms announced in March.

The deal talks, however, are unlikely to collapse if the two parties do not ink a pact by Sunday, with three people close to the ports-to-telecoms conglomerate saying the parties could extend the deadline to continue exclusive negotiations.

The first part of the deal - definitive documentation to sell two port operations near the Panama Canal - was also not signed by an April 2 deadline set in the sales announcement.

The people declined to be named due to the sensitivity of the matter.

BlackRock ( BLK ) declined to comment. CK Hutchison ( CKHUF ) and MSC Mediterranean Shipping Company, which CK Hutchison ( CKHUF ) said in May was the main investor in the consortium, did not respond to requests for comment.

U.S. President Donald Trump hailed the deal as "reclaiming" the Panama Canal, after his administration previously called for the removal of what it said was Chinese ownership of the ports near the canal.

But in April, China's top market regulator said that it was paying close attention to CK Hutchison's ( CKHUF ) planned sale and that parties to the deal should not try to avoid an antitrust review.

Beijing's stance on the planned deal was made public after pro-China media launched a stinging criticism, saying China had significant national interests in the transaction and it would be a betrayal of the country.

"I think at this moment it's not very optimistic that they can directly sell the ports to the consortium," said Jackson Chan, global fixed income senior manager at FSMOne Hong Kong, which has clients holding CK Hutchison ( CKHUF ) bonds.

"The market has already digested the news, even if it announces next week that it won't sell anymore, I don't think it'll be a shock because the market understands it wouldn't have a large impact on its operations."

DEAL RISKS

CK Hutchison ( CKHUF ) shares, which jumped 33% the following two days after the deal was announced in early March, erased all of the gains by mid-April. But since then it regained lost ground along with the rise in the broader Hong Kong market index.

The outlook for the deal has been clouded further in recent days, with a separate source telling Reuters that Chinese ports operator China Cosco Shipping Corp (COSCO) was also looking to join the consortium to buy the ports business.

COSCO is requesting veto rights or equivalent power in the entity that will take over 43 ports from CK Hutchison ( CKHUF ), Bloomberg News reported this week, citing people familiar with the matter.

COSCO did not respond to a request for comment.

Responding to Reuters' emailed queries on the deal prospects and possible involvement of COSCO in the consortium, a White House official said: "As the president said, we didn't give it to China. We gave it to Panama, and we're taking it back."

The official did not elaborate.

The existing consortium would likely allow COSCO into the deal, said Cathy Seifert, an analyst at CFRA Research.

"The bigger risk to the deal being consummated, in my opinion, is likely the Trump administration, which is likely to block a deal that would include China," said the New Jersey-based analyst who tracks BlackRock ( BLK ).

Ballingal Investment Advisors strategist David Blennerhassett, who publishes on the independent online research platform Smartkarma, said the addition of COSCO in the consortium was likely to enrage Trump.

"Trump, who has a handful of issues already on his plate, would be incandescent," he said.