* Hammond says 'very confident' of deal on Brexit
* PM May, British officials to speak to DUP
* May could return to Brussels as early as Wednesday
* UK and EU scrambling to thrash out a Brexit deal
LONDON, Dec 5 (Reuters) - Britain said it was a confident of a deal on Brexit just hours after a tentative agreement with the European Union over the Irish border was dashed by Prime Minister Theresa May's kingmakers in Belfast.
After a tumultuous day which saw a choreographed attempt to showcase the progress of Brexit talks thwarted at the last minute, May will try to gauge on Tuesday what her supporters in Northern Ireland's Democratic Unionist Party (DUP) might accept.
May, who is now scrambling to thrash out a deal with the EU while keeping the DUP, which props up her minority government, and her own party onside, may return to Brussels as early as Wednesday to continue talks, a Downing Street official said.
"We're very confident that we will be able to move this forward," finance minister Philip Hammond said as he arrived for a meeting with EU counterparts in Brussels.
"Discussions are going on right now and will go on throughout the day," Hammond said.
May wants the EU to open the so-called second phase of Brexit negotiations, about the trading relationship after the United Kingdom's withdrawal at 2300 GMT on March 29, 2019.
But the EU will only move to trade talks if there is enough progress on three key issues: the money Britain must pay to the EU; rights for EU citizens in Britain and British citizens in the EU; and how to avoid a hard border with Ireland.
Sterling fell by a cent against the dollar on Monday after hopes of a deal were disappointed and was a further 0.4 percent lower at $1.3426 on Tuesday.
All sides say they want to avoid a return to a hard border between EU member Ireland and the British province of Northern Ireland, which might upset the peace established after decades of violence.
But they have found it difficult to find a way to satisfy both the Irish government and DUP lawmakers who say Northern Ireland must quit the EU on the same terms as the rest of the UK. That includes leaving the single market and customs union, which is May's official policy but complicates the border issue.
A tentative deal on the border, promising "regulatory alignment" on both sides of the island of Ireland, was agreed on Monday when May sat down to lunch with European Commission President Jean-Claude Juncker but later rejected by the DUP.
"When it comes to regulatory divergence which separates Northern Ireland politically and economically from the rest of the United Kingdom, we cannot have that," Jim Shannon, a DUP lawmaker, told BBC Radio Ulster .
Irish Foreign Minister Simon Coveney indicated Dublin was willing to work on presentation with Britain but insisted there must be no hard border between north and south.
The leader of Scotland's devolved government, Nicola Sturgeon, suggested that one way to solve the riddle would be for the whole United Kingdom to remain in the single market and customs union.
"This could be the moment for opposition and soft Brexit/remain Tories to force a different, less damaging approach -- keep the UK in the single market and customs union," Sturgeon said on Twitter. (Editing by Catherine Evans)