But Microsoft chief lawyer Brad Smith gave no concrete signs of what solutions could be found, after the Seattle-based firm completed its initial presentation to the European Commission on the second day of a three-day hearing.

And a representative of key Microsoft rivals said Microsoft is struggling to convince the Brussels commission.

"The only way a settlement could be possible is if somehow the EU would capitulate the way the US and Justice Department did," said Ed Black, president of the Computer and Communications Industry Association, which includes Oracle Corporation, Nokia, Sun Microsystems and others.

Microsoft secured a settlement with the US Justice Department in November 2001 that was condemned by other firms as inadequate. Appeals against the settlement are drawing to a close.

Microsoft's chief legal counseil was upbeat in his only public declaration so far during the Brussels hearings.

"I do really want to underscore one thing, which is that we come to Brussels not only to discuss the issues but to work things out," he told reporters in a break from the closed-door talks, which end Friday.

"We will bring (to the talks) a great sense of energy and creativity, to explore every possible way to come to solutions to the questions and concerns that people may have," he said.

Microsoft could face upwards of three billion dollars in fines and be forced to make substantial changes to how it markets its all-conquering Windows operating system if found guilty of using its dominance to crush rivals.

Bill Gates' firm is accused of abusing the dominance of Windows -- which is installed in 90 percent of all personal computers (PCs) -- to fend off competing applications.

The EU hearings revolve around charges that Microsoft has tried to squelch rival products to its Windows Media Player, such as RealPlayer and Apple QuickTime.

And it is accused of trying to squeeze out other firms in the market for "low-end servers" -- computers that provide e-mail and other services to multiple users.

The online media market is seen as one of the crucial growth areas that will shape the computer industry for years to come as more and more users venture into cyberspace to listen to music or watch films.

Control of the servers that provide such services would give Microsoft extraordinary additional clout to dictate terms to PC manufacturers.

The European Commission has said Microsoft must come up with "very convincing" arguments to head off an adverse judgement and the threat of fines.

The Commission has already detailed preliminary remedies that would require Microsoft to strip Media Player from Windows and reveal product secrets for its servers to rivals.

Fines of up to 10 percent of the company's global revenues could also be in the offing, equivalent to 3.2 billion dollars for Microsoft.

However, past EU fines against companies accused of monopolistic practices have ranged from 0.1 percent to just over 1.0 percent of the firm's revenues.

A final decision by the Commission in the Microsoft case is unlikely before early 2004, sources say.

SPACE.WIRE