UPDATE 1-"No deal in the desert," EU says of Brexit breakthrough in Egypt

European Union leaders will not clinch a deal on Brexit during a summit with their Arab peers in Egypt scheduled for Sunday and Monday, an EU official said on Friday. "There will be no deal in the desert," the official said when asked about chances of a Brexit breakthrough during the EU summit with the League of Arab States in Sharm el-Sheikh on Feb.24-25.

However, the source said European Council President Donald Tusk would hold a bilateral meeting with British Prime Minister Theresa May on the sidelines of the summit on Sunday at 1630 local time in Egypt. German Chancellor Angela Merkel and Dutch Prime Minsiter Mark Rutte are among more than 20 EU leaders expected to go to Egypt. London hopes May will have a chance there to lobby again for concessions that will unlock Brexit ratification in Britain's divided parliament.

EU diplomats say there has been some movement towards a possible deal with London but stressed that much work remained to be done and were not expecting any imminent breakthrough. However, sterling weakened on Friday after the EU official ruled out a weekend deal. (Reporting by Gabriela Baczynska Editing by Gareth Jones)