NAIROBI, Kenya -- The death toll in the aftermath of Kenya's flawed elections surpassed 1,000 people yesterday, as negotiations entered a critical stage in the effort to end the country's violent political situation.

According to the Red Cross, which tabulated the casualties, most of the killings have been in the turbulent Rift Valley, where gangs from opposing ethnic groups have fought fiercely in the past few days.

"It's a very volatile situation out there," said Anthony Mwangi, a spokesman for the Kenya Red Cross. He said that more than 300,000 people had been driven from their homes and that the continuing insecurity, especially in the countryside, was slowing the delivery of food, water and tents.

Roadblocks run by machete-wielding mobs have popped up across the country. In many places, rowdy young men act like toll collectors, exacting payment before lifting barriers to allow vehicles to pass.

Kenya descended into turmoil after a deeply troubled presidential election in December. The country's electoral commission declared that the incumbent president, Mwai Kibaki, had narrowly beaten the top opposition leader, Raila Odinga, but election observers have said there was widespread evidence of vote-rigging.

The dispute uncorked decades of frustration about political, economic and land issues, pitting opposition supporters against members of the president's ethnic group and groups perceived to support the government. Much of the violence has taken on an ethnic flavor, though many participants insist their motives are political.

Yesterday, officials from the government and Kenya's main opposition party began discussions on how to address the political crisis. Each side agreed to give the other an hour to present its case today.

One participant in the talks said they were going well, with some welcome bursts of humor. The two sides even had lunch together yesterday.

The rub will come when a decision has to be made about what actually to do. Both Kibaki and Odinga claim to have won the election fairly.

Kofi Annan, the former U.N. secretary-general, is mediating the talks and searching for a compromise. That might include a power-sharing arrangement between the government and the opposition, a transitional government to serve until a new election is held or a comprehensive audit of the election results with both sides agreeing to accept the winner.

The United Nations is also pushing for a South Africa-style truth and reconciliation commission to investigate the explosion of violence that has convulsed Kenya. Until recently, it was viewed as one of the most stable and promising countries on the African continent.

Yesterday, Annan met with Kenya's top business leaders, who pleaded with him to speed up the negotiations because the country's economy had been brought to its knees. Kenya's billion-dollar-a-year tourism industry has suffered immensely, with game parks and beach hotels deserted.

Agriculture has also suffered because the insecurity in the Rift Valley has blocked the flow of produce and commodities such as tea and coffee.

At the end of trading Monday, the stock market was down roughly 25 percent in dollar terms from where it was at the time of the election. Business leaders estimate that the economy has already lost several billion dollars and is on track to lose several billion more.