MONTREAL, Aug 20 (Reuters) - Canada's two main rail

companies and the Teamsters union are "doing the work necessary"

to reach an agreement and avert a looming strike but "real

issues" are outstanding, federal Labour Minister Steven

MacKinnon told Reuters on Tuesday.

MacKinnon was speaking after talks with Canadian National

Railway ( CNI ), which like Canadian Pacific Kansas City ( CP ) says it will

lock out workers early on Thursday unless a deal is reached.