Saudi Arabia and Iran, backers of the main rivals in Lebanon's political crisis, are negotiating a deal to end the standoff, Lebanese political sources said.

According to the sources, Saudi Prince Bandar bin Sultan held talks with senior Iranian official Ali Larijani in Tehran to try reach an agreement that both the Lebanese government and the opposition would accept.

The Lebanese sources did not give many details on the proposed deal but one source said it covered formation of a unity government and an understanding on a UN-backed international court to try suspects in the killing of Lebanon's former Prime Minister Rafik al-Hariri in 2005.

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The source said if there was an agreement in Tehran, the Saudis would present an initiative to resolve the crisis at an international aid conference for Lebanon in Paris scheduled for Thursday.

Ahead of the Paris conference, France on Wednesday said it will offer the Lebanese government a 500 million euro ($650.3 million) loan on very favorable terms, a spokesman for French President Jacques Chirac said.

The announcement came amidst a high-strung debate in Lebanon on the need for international financial aid to the bankrupt government. On Tuesday, opposition-led protesters went on a general strike in which three people were killed and more than 130 were injured.

Chirac said in television interviews on Tuesday that the Lebanese government had practically run out of money and that anti-government protests in Lebanon could discourage the international community from granting financial aid to Beirut at a donor conference in Paris on Thursday.

Siniora's government has shrugged off demands to refrain from accepting funds from the West and is instead preparing for an international aid conference in Paris on Thursday that it hopes will yield billions of dollars for Lebanon's debt-laden economy.

Tuesday's strike was called by the Hezbollah-led opposition in a bid to topple Prime Minister Fouad Siniora's Western-backed government.

Thousands of protesters blocked main roads in Beirut and around the country with rubble and burning tires as the strike began.

Lebanon's anti-Syrian majority leaders Tuesday accused the opposition of staging a "coup" against the government by blocking major roads.

"This is a coup d'etat. This is a revolt in all sense of the word," Christian leader Samir Geagea told the Lebanese television station LBCI.

In a televised speech, Siniora vowed to remain strong and united with the Lebanese people against the violence. "We will stay together against intimidation. We will stand together against strife," he said.

"Today's general strike turned into actions and harassment that overstepped all limits and rekindled memories of times of strife, war and hegemony," Siniora said.

He hinted that the government might take stronger measures.

"The duty of the army and security forces does not allow any flexibility or compromise regarding the public interest, order and civic peace," Siniora declared.

Chirac: Protests will deter international donors
French President Jacques Chirac said on Tuesday anti-government
protests in Lebanon could discourage the international community from granting financial aid to Beirut at a donors' conference scheduled for Thursday.

Chirac said in an interview with France 24 television and Lebanese television that Lebanon's financial situation was "very serious, very grave", adding: "practically, the Lebanese government has no more money."

"Lebanon has an urgent need to be financially supported and helped," Chirac said.

"It is clear that the behavior ... of those who are using it to create social difficulties at the same moment when we are gathering for this conference, does not encourage those who want to help to give Lebanon the means to survive," he said

Donor countries are expected to pledge money, possibly in the billions of dollars, for Lebanon's debt-laden economy at Thursday's conference in Paris.

Meanwhile, the United States also voiced concern about the protests, calling on all sides to exercise restraint and settle their differences peacefully.

"The United States is deeply concerned about developments today in Lebanon," State Department spokesman Sean McCormack said in a statement on Tuesday.