MADRID, April 28 (Reuter) - The Spanish cabinet met on Friday to approve aid of two billion pesetas ($16 million) to Spanish fishermen forced into port from May 1 by failure of the European Union (EU) and Morocco to reach a new fishing accord.

Some 650 Spanish and 50 Portuguese vessels which regularly work fishing grounds off Morocco will have to stop fishing when the old agreement expires at midnight on April 30.

The enforced halt is another blow to Spain's giant fishing fleet, by far the biggest in the EU, already hurt by sharp cuts in its quotas of North Atlantic fish after a recent conflict with Canada over Greenland halibut.

EU-Moroccan talks broke off without agreement in Rabat on Thursday and will not resume until May 12 in Brussels.

EU fisheries commissioner Emma Bonino said earlier this week she thought a new deal could take three to five weeks to achieve because of widely differing negotiating positions.

An EU source said in Rabat after Thursday's inconclusive talks the two sides were divided over the issue of reducing catches to preserve stocks. Morocco wants cuts of 30 to 65 percent, depending on the species of fish, but the EU sees this as unacceptable.

The expiring accord, the EU's most important external fisheries agreement, provided a livelihood for some 28,000 fishermen and fish processors in Spain -- mainly Andalusia and the Canary Islands -- and Portugal.

The aid package to Spanish shipowners and crews will be made up of Spanish government money and EU regional funds.

Agriculture and Fisheries Minister Luis Atienza told Spanish

state radio on Friday the fishermen themselves accepted that the fishing halt was a "lesser evil, which would allow efforts to proceed to reach a satisfactory accord".

But he acknowledged a deal was "not yet in sight, as positions are very far apart".

Andalusian fishermen's guild chief Rafael Montoya described the mood among shipowners and crews in the region as one of "nervousness, impotence and anger".

He dismissed an EU proposal to create joint Spanish-Moroccan companies operating Spanish boats with mixed crews under the Moroccan flag. "This never worked," he told reporters.

The economic council of the northwest Spanish port of Vigo, home base of most of the North Atlantic fleet hit by the EU agreement with Canada, urged the EU to be firm in defending European interests in talks with Morocco.

"We prefer a good agreement late to a bad agreement now," a council statement said.

Thousands of Galician fishermen, political figures and social representatives were preparing to hold a mass demonstration in the regional capital of Santiago de Compostela on Saturday to protest against the accord with Canada.