1ST LEAD Still no deal on EU financial tax; negotiations to continue Tuesday By Alexandra Mayer-Hohdahl, dpa

Brussels (dpa) - Eleven EU countries failed Monday to overcome their last differences on the creation of a controversial tax on financial transactions, but decided to continue their negotiations on Tuesday.Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain have been negotiating the tax for nearly three years. They had at one point planned to start implementing the levy in 2016.EU Economy Commissioner Pierre Moscovici said the countries are just "a few centimetres" away from an agreement.Remaining sticking points include the treatment of derivatives and the geographical application of the tax, diplomats had said ahead of the talks on Monday evening. They lasted around two hours."We have suspended the meeting and will continue tomorrow morning," Austrian Finance Minister Hans Joerg Schelling, who has been leading the negotiations, told journalists afterwards.German Finance Minister Wolfgang Schaeuble had declared himself "sceptical" ahead of Monday‘s round of negotiations."We have already had so many meetings on this, and it always fails somewhere because of one of the member states, because of some technical question," he said.Schelling indicated that Italy was among three countries putting up resistance. He had warned that he did not have "high hopes" for success if Monday‘s talks failed to deliver a deal.Schaeuble, however, predicted that work would continue in 2016 in case an agreement is not immediately found.A Brussels diplomat who spoke on condition of anonymity also said that he could not imagine the countries involved wanting to "scrap" the progress made to date."Nobody wants to pull the plug," the diplomat said.But the idea of introducing a financial transaction tax in the EU has long been controversial. It had failed to find support among the bloc‘s 28 member states, leading the 11 countries to use a go-it-alone approach known as enhanced cooperation.Supporters of the levy have argued that it will help make the financial sector - which many see as the source of recent economic crises - act more responsibly. But critics have said it could increase the cost of capital and drive investment away from Europe.