UPDATE 2-GM, UAW make progress, union shuns strike

GM spent some $4.8 billion on health care last year. Wall Street analysts have been optimistic that GM will emerge from the contract talks with a deal that could cut some $3 billion in such costs annually by shifting responsibility for retiree health care to a UAW-aligned VEBA.

Shares of GM rose 47 cents, or 1.4 percent, to close at $34.94 on Friday. The stock has gained almost 20 percent since Sept. 10 on expectations that the UAW talks will produce deep savings for GM as it restructures and attempts to make its U.S. operations profitable again.

GM, Ford and Chrysler are seeking sweeping concessions from the UAW to close a labor cost gap with Toyota Motor Corp (7203.T: Quote, Profile, Research) and other Japanese automakers operating in the United States that they say amounts to more than $30 per hour for the average factory worker.

Without such concessions from the UAW, the automakers have said they would have to close more U.S. factories and shift more production to lower-cost economies.