US President Barack Obama is "modestly optimistic" an agreement to avoid the fiscal cliff of tax rises and spending cuts can be reached following a meeting with congressional leaders.
At the meeting in Washington, Mr Obama reportedly asked lawmakers to hold a vote on a plan that would allow tax rises for those who earn $250,000 and over, and would extend unemployment insurance benefits.
"The hour for immediate action is here," he told reporters at a White House briefing after the meeting.
"I'm modestly optimistic that an agreement can be achieved," he said.
Taxes on all Americans are set to rise when temporary rates expire on 31 December, and at the same time automatic government spending cuts are to be introduced - a combination analysts say could push the US back into recession.
US Senate leaders were working to craft legislation by Sunday that averts the year-end tax rises and spending cuts, but many details needed to be worked out, Reuters reports.
The major sticking point on taxes has been Republican opposition to hikes on anyone, particularly in the absence of heavy cuts in spending in government-run health programmes Medicare and Medicaid for senior citizens and the poor.
Democrats in Congress want to keep lower tax rates for most Americans, but raise them on those earning above $250,000 a year.
US stocks closed lower on Friday amid doubt a deal can be reached. The Dow Jones Industrial Average finished 158.20 points (1.21%) lower at 12,938.11. The broader S&P 500 lost 15.67 points (1.10%) to close at 1,402.43.
