Image copyright Reuters Image caption Theresa May met German's Angela Merkel and other EU leaders

Issues still need to be resolved but progress is being made in Brexit negotiations, Theresa May has insisted.

The prime minister said there had been a "very positive atmosphere" in talks with several EU leaders in Brussels.

The UK, she said, would honour its financial commitments and shared the same desire as Ireland to stop barriers to trade or movement across the border.

EU Council President Donald Tusk said talks could move to the next phase in December but it was a "huge challenge".

At a security summit in Brussels, Mrs May had lunch with Angela Merkel and also met Mr Tusk, who told her last week that she has until the start of December to make an enhanced offer on money and provide guarantees on the Irish border after Brexit.

Ministers have given her their backing to increase the UK's "divorce bill" but only if the EU shows movement on trade.

The government has refused to comment on reports it had agreed to pay about £40bn to pave the way for EU leaders to approve the next phase of talks on future relations at a summit on 14 December.

Speaking in Brussels, Mrs May did not answer specific questions about money and said there were "still issues across the various matters that we're negotiating on to be resolved".

But she added: "There's been a very positive atmosphere in the talks and a genuine feeling that we want to move forward together."

Last week, Mr Tusk said the EU was "ready" to move on to the next phase of talks - focused on a trade and security partnership after the UK leaves in March 2019 - but the UK must first show more progress on outstanding "separation" issues.

'Optimistic'

The BBC's Europe reporter Adam Fleming said that after holding talks with Mrs May, Danish PM Lars Lokke Rasmussen had told journalists in the Belgian capital that there had been "movement" on the issue of money.

"It seems to me that there is progress and so I have decided to be optimistic about this," Mr Rasmussen - one of the UK's closest allies - said.

The PM also said the UK was in continuing discussions with the Irish government about the solutions for avoiding a hard border between Northern Ireland and Ireland.

No 10 earlier had to clarify its position after a spokesman appeared to suggest the possibility of Northern Ireland staying in the customs union may be up for negotiation.

Asked about the issue at a lobby briefing, the spokesman said the UK must "continue to negotiate to find an innovative way forward".

But Downing Street later insisted that the UK's stated policy - that the whole of the UK is leaving the single market and customs union - remained in force.

The UK voted to leave the EU in June 2016, and served the EU with formal notice of Brexit in March 2017. This began a two-year countdown to the UK's departure day which will be in March 2019.