* Ontario strike deal covering 35,000 employees
* Latest progress in talks with provincial unions
* Province imposed contract on teachers last week
By Claire Sibonney
TORONTO, Jan 9 (Reuters) - Ontario's government said on Wednesday it reached a deal with public employees to freeze wages for two years as part of a broader and contentious push to rein in the budget deficit.
The tentative deal with the Ontario Public Service Employees Union covers more than 35,000 workers, including government staff, a relatively small group of workers compared to some of Ontario's larger unions.
"This deal will help us meet our fiscal targets and it shows how everyone has a role to play to help Ontario eliminate the deficit," Ontario's Finance Minister Dwight Duncan said in a statement.
Last week, Ontario imposed new labor contracts on some 130,000 teachers, despite job action that included one-day strikes and teachers' refusal to carry out extracurricular activities.
Ontario's minority Liberal government reached deals with doctors and other teacher groups, but failed to agree terms with the larger group of elementary and secondary school teachers.
Ontario Premier Dalton McGuinty, who said late last year that he would resign once the Liberals elect a new leader later this month, vowed last March that the government would reduce its C$14 billion ($14.18 billion) deficit by standing firm on public sector wages.
Credit rating agencies have repeatedly warned that Ontario needs to stick to tough austerity measures to curb the deficit.