The US and the European Union appeared last night to be edging towards an attempt to settle their conflict over trade in bananas that would avert a showdown in the World Trade Organisation.

A senior EU official said yesterday that the European Commission planned to make a diplomatic approach to the US in the next 48 hours to determine whether it was "in the market for a deal". He said Brussels believed the dispute could be settled before a WTO panel ruled on it late this month or early next, provided President Clinton's administration was ready to sell a deal to Congress.

Sir Leon Brittan, trade commissioner, told the European Parliament in Strasbourg that the Commission was urgently seeking a solution and had begun informal exploratory talks with Washington.

Mr Robert Mallett, deputy US commerce secretary, added to hopes of a breakthrough. He said, in Rome, that there was a "window of opportunity" for a solution before the WTO panel reported. But he said it was up to the EU to make an acceptable proposal.

US officials said that while US special trade ambassador Mr Peter Scher had made several new proposals, the Commission had appeared to resist them.

They said the key to a settlement lay in the Commission securing a mandate from the EU Council of Ministers to open formal negotiations.

They said the EU would almost certainly try to persuade the US to soften the blow by stepping up development aid and technical assistance to the affected producers, particularly in the Caribbean.

Sir Leon and the British government have sought to persuade the US that it is in its interests to prevent damage to Caribbean economies, which could be prompted to turn from growing bananas to producing heroin and other dangerous drugs.