* Seven hours of talks fail to convince Traore
* Lead mediator had said deal reached "in principle"
* Tuaregs had been ready to sign agreement (Recasts with end of meeting)
By Tiemoko Diallo and Adama Diarra
BAMAKO, June 12 (Reuters) - Mali's interim president told international mediators on Wednesday he wanted changes to a proposed ceasefire deal with Tuareg separatist rebels, meaning talks will have to resume on Thursday in neighbouring Burkina Faso.
An agreement to allow Mali's civil administration and armed forces to return to the Tuaregs' last stronghold of Kidal, in Mali's remote northeast, is essential for presidential elections on July 28 needed to unlock billions of euros in donors' pledges.
The vote would complete a democratic transition after a military coup in March 2012 triggered by a Tuareg uprising that was soon hijacked by al Qaeda-linked groups. The Islamists' 10-month domination of northern Mali was ended by a French-led military campaign launched in January.
Burkina Faso's foreign minister, Djibril Bassole, had said on Monday that Mali's government and the Tuaregs had reached an agreement in principle. Since then, Bamako has appeared reticent about a deal imposing conditions on its army's return to Kidal.
International mediators - including representatives of the United Nations, the European Union and the AFISMA African peacekeeping mission - held seven hours of talks with Mali's interim president, Dioncounda Traore, in a fruitless bid to win his approval.
"The interim president of the republic explained the government's point of view in detail and on the basis of that, we are going to continue negotiations in Ouagadougou," said the head of AFISMA, Pierre Buyoya. "We have high hopes that in the coming days we will reach an agreement."
Burkina Faso President Blaise Compaore is leading the mediation efforts.
The Malian government has threatened to seize Kidal if no agreement was reached in the talks. Its army, re-equipped after last year's humiliating defeats by the Tuareg and Islamist rebels, advanced towards Kidal last week, overrunning the Tuareg MNLA separatist rebels in the first fighting in months.
There is widespread opposition in Bamako to any deal that would make concessions to the MNLA, whose leaders face arrest warrants in Mali for alleged crimes committed during their occupation of the north.
"If politicians sign these deals, they will have to answer before history one day,"Mali's public prosecutor, Daniel Tessougé, said on Wednesday. "Mali must not humiliate itself again for the billions of euros promised by our international partners."
International donors pledged 3.25 billion euros ($4.31 billion) last month to help Malirebuild from the conflict, but the disbursement of the bulk of the money depends on the organisation of elections.
France has pushed hard for elections to go ahead. It plans to hand over responsibility for internal security in Mali to a U.N. peacekeeping mission due to deploy next month.
Bassole said the draft agreement would allow the army to deploy to Kidal and called for the creation of a mixed commission composed of both sides to monitor security.
The rebels would be confined to their quarters but would remain armed pending a final agreement on their demands for increased autonomy. They are expected to negotiate that after the elections.
The head of the delegation representing the MNLA said late on Tuesday that the rebels had accepted the deal.
"We've analysed the document ... and everyone agrees today that we will not be able to get better than what we have in the document. I can confirm that we are ready to sign," Mahamadou Djeri Maiga said. ($1 = 0.7533 euros) (Additional reporting by Mathieu Bonkoungou; Writing by Joe Bavier and Daniel Flynn; Editing by Peter Cooney)