MONTREAL -- Negotiations between students and the provincial government have hit a wall, student leaders said Wednesday evening as they returned to a third night of talks, a lot less optimistic about a positive outcome.

During a supper time break, Martine Desjardins, head of one of the university groups, said the Education Department hasn't yet looked at the student counter proposal submitted Tuesday.

``We are disappointed,'' she told reporters, adding that reaching a deal Wednesday will ultimately depend on the government's response.

``It is clear that there is a possible deal with what we put on the table.''

The talks resumed with the participation of Finance officials who will comment on the students' counter-proposal.

Gabriel Nadeau-Dubois, a co-spokesman for the more hardline CLASSE group, said it has no immediate plans to walk away from talks but will take a decision depending on how they progress.

``We made steps forward yesterday, this afternoon we took steps backward,'' he said.

``If the tone has changed, it's really on the government's side, not the students.''

Leo Bureau-Blouin, president of the college students' association, said he remained ``optimistic'' that a deal can be reached and said students are prepared to stay very late to reach a deal.

As the two sides were trying to reach a deal to end the crisis, pot-banging protests in support of the Quebec student strikers were seen in New York City and several Canadian cities Wednesday night in an event dubbed Casserole Night in Canada.

For the first time since the Montreal protests started, police declared the 37th nightly march legal since organizers provided a route ahead of time.

Addressing the proposed tuition fee increase appears to be the key to hammering out an elusive deal to end the four-month dispute.

An offer to cut the proposed tuition fee increase by $35 was dismissed unanimously in talks Tuesday night, said two of the heads of students groups involved in the talks.

The government had already lowered the yearly increase, by offering to spread it out over seven years for an annual jump of $254, a move previously rejected by students.

Education Minister Michelle Courchesne's new proposal would have reduced the yearly hike to $219 over seven years.

The original increase, which kicked off the dispute in February, was for $325 a year over five years _ a move that would bring annual fees to about $3,800 in 2017.

But the latest offer still wasn't good enough, student leaders said Wednesday.

``It was put on the table and it was automatically refused by the associations,'' Desjardins said earlier as she returned to the bargaining table.

She would not comment on any of the other proposals and said she and her colleagues ``will take our time'' to reach a suitable deal.

Earlier in the day, Nadeau-Dubois said the $35 reduction was unsatisfactory.

``It was judged insufficient by the student organizations around the table,'' he said. ``We submitted a counter-proposal which we won't go into right now.''

He added that ``new elements'' had arisen at Tuesday night's session and he imagined the government had been looking hard at those.

``There is one serious scenario which includes several elements,'' he said. ``We have proposed several aspects, a global offer to address the question of the tuition increase.''

Nadeau-Dubois said several areas were being considered as places where money could be found to lower the tuition fee increase.

Courchesne declined to discuss any of the proposals as she entered the talks, saying only that serious efforts are underway to resolve the dispute.

The tone of the negotiations appeared to change after Premier Jean Charest finally sat down for a face-to-face meeting with protest leaders for about 50 minutes on Monday night.

It was an abrupt change in approach for a premier who had repeatedly resisted opposition calls to get personally involved in talks with students.

The premier characterized his meeting with students as representing a new stage in the dispute; he described the exchanges as respectful and courteous.

Students say the pressure is all on the government now. They have all summer to negotiate because their school semesters have been suspended, while the province is desperate to calm the streets before Montreal receives tourists for its summer festivals._ With files from Alexandre Robillard in Quebec City.

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