UPDATE 1-Spain's Sanchez says Podemos deal possible if leader not in cabinet

Spain's acting prime minister Pedro Sanchez insisted on Thursday that he would not accept far-left Podemos leader Pablo Iglesias as a member of his cabinet, saying that was the main obstacle to clinching a deal to form a government.

Spain's parliament will vote next week on whether to confirm or reject Sanchez as premier, a role he has held on an acting basis since an inconclusive election in late April. If he is not confirmed in the role, a repeat election is likely. Podemos would be a natural ally for Sanchez's Socialists, but they have so far been unable to clinch a deal, with Podemos saying it wants top jobs in the cabinet for Iglesias and others and Sanchez offering lower-ranking posts for experts.

"What I offered is that we include qualified people from Podemos and the disagreement again was on the participation of Mr. Iglesias in government," Sanchez told laSexta television. "It is not possible that Mr. Iglesias be part of the government," Sanchez added, citing policy differences on issues including how to handle Catalonia's independence drive.

Podemos has consulted party members on whether the party should demand that Iglesias and other top officials be part of the government in order to back Sanchez. The outcome is expected late on Thursday or on Friday. Sanchez also renewed calls for the conservative People's Party and centre-right Ciudadanos to abstain when parliament votes next week in order to allow him to be sworn in as prime minister.

If no deal is reached in parliament this week or possibly in September, a repeat election would be held on Nov. 10. If there is a deal and Sanchez is confirmed as prime minister, the question will be what he can achieve in power given the fragmented nature of Spanish politics.