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Talks to resume midday after 36-hours of negotiations

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Agreement still possible before Christmas, source says

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IG Metall has threatened major strikes if no deal struck

(Recasts throughout)

By Victoria Waldersee

HANOVER, Germany, Dec 18 (Reuters) - Crunch talks

between Volkswagen and unions over cuts to the

automaker's German operations will resume on Wednesday after a

brief break, reflecting intense efforts to strike a deal before

Christmas and avert major strikes in 2025.

The pause follows 36 hours of negotiations, which began on

Monday, as both sides seek to end a bitter standoff over

potential factory closures and mass layoffs that has thrown

Europe's top carmaker into its biggest crisis in years.

An agreement before Christmas is still possible, a person

familiar with the negotiations said, while cautioning that the

complexity of the talks, which initially kicked off in late

September, meant there is no guarantee of a deal.

Germany's IG Metall union, which has vowed fierce resistance

to any plant closures and staff cuts, said it would provide an

update depending on any new developments, adding it was

currently not clear when that would be the case.

The two sides have been trading blows over what Volkswagen

says are necessary cost cuts to be able to compete with more

agile and cheaper Asian rivals, all while an expected transition

to electric vehicles has lost momentum.

Both have stuck to their red lines, with unions opposed to

any plant closures, while VW does not rule them out, citing a

shrinking European market and the need to cut overcapacity.

Germany's most powerful union hopes for an agreement this

week to give workers peace of mind before Christmas, threatening

to escalate strikes in the new year if no deal is struck.