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UPDATE 2-Trump holds firm on border wall, offers steel option as compromise

Jeff Mason and Ginger Gibson

(Adds Trump comments)

WASHINGTON, Jan 6 (Reuters) - U.S. President Donald Trump on Sunday pledged not to bend in his demand for a wall along the southern border with Mexico but said the barrier could be made of steel instead of concrete as a potential compromise with Democrats who refuse to fund the project.

Trump's comments came at the start of the third week of a partial government shutdown that has left hundreds of thousands of federal workers idled or without paychecks.

Trump, a former New York businessman, said he could relate to the workers who would have trouble paying bills because of the shutdown and threatened, again, to declare a national emergency as an alternative way to build the wall, depending on the outcome of talks in the coming days.

Democrats, led by new Speaker of the House of Representatives Nancy Pelosi, consider the wall to be immoral and have declined to approve the $5.6 billion Trump wants to make good on the signature promise of his 2016 presidential campaign. Democrats, who took control of the House last week, passed a bill to reopen the government without wall funding.

The debate was a "very important battle to win from the standpoint of safety, number one, (and) defining our country and who we are," Trump told reporters at the White House before leaving for a short trip to the Camp David presidential retreat.

"The barrier, or the wall, can be of steel instead of concrete, if that helps people. It may be better," he said.

Vice President Mike Pence is leading a second round of talks with congressional aides on Sunday about the issue, but Trump said he did not expect those talks to produce results.

The White House warned again that the shutdown could last for some time while suggesting that the offer of a steel barrier was an olive branch to Democrats.

Mick Mulvaney, Trump's acting chief of staff, told NBC's "Meet the Press" program that agreeing to a steel separation would allow Democrats to stick to their refusal to fund a wall.

"That should help us move in the right direction," said Mulvaney, who is also the head of the Office of Management and Budget.

Democrats would likely demand other concessions, like protections for immigrants brought to the United States as children, otherwise known as Dreamers, or changes to other spending provisions.

House Majority Leader Steny Hoyer did not show his hand when asked whether the White House offer to take a concrete wall off the table was evidence of compromise.

"It'll be discussed," he said on NBC.

Mulvaney, who took part in talks with Pence and congressional aides on Saturday, said technical requests bogged them down.

"I think this is going to drag on a lot longer. I think that's by intention," he said.

Large chunks of the federal government were shut down on Dec. 22 after lawmakers and the president hit an impasse over Trump's demands to build a wall. About 800,000 government workers are either furloughed or working without pay.

Trump is demanding that any funding to keep the federal government operational also include money to help build a $23 billion wall along the U.S. border with Mexico.

Trump said on Sunday that he should not have to lower his demand for $5.6 billion, though he said he understood the impact the impasse was having on affected federal workers struggling to pay their bills.

"I can relate," Trump said. "I'm sure that the people that are on the receiving end will make adjustments."

Not all Republicans agree with Trump's insistence on keeping many government agencies shuttered until the border debate is resolved.

"It is not a sign of weakness to try to figure out a middle ground, and I think that both sides need to indicate a willingness to listen and to compromise, said U.S. Senator Susan Collins of Maine on NBC. She called the debate over using steel versus concrete "bizarre."

House Democrats plan to pass a series of bills this week to reopen government, breaking up the legislation they have already approved in a bid to get Republicans to agree to reopen certain agencies, Hoyer said on "Meet the Press."

"We need to open up government and then negotiate. Not the other way around," he said.

(Reporting by Ginger Gibson and Jeff Mason; Additional reportering by Amanda Becker; Editing by Lisa Shumaker)