The Knicks have been speaking to Orlando about Steve Francis for 10 days, offering Penny Hardaway's expiring contract in a would-be megadeal.

But the Magic traded center Kelvin Cato ? a piece of a proposed Knick deal ? to Detroit last night, a move that could make any deal a longshot bid, team sources said.

"We're no closer to getting Francis than we were 10 days ago," said one Knicks official, bleakly.

If the Orlando-Knicks talks are deadened, it could spring Denver back into action and revive the three-team deal that would send Francis to the Nuggets and point guard Earl Watson to the Knicks. Watson is the backup point guard Brown believes his team needs.

Asked about a potential two-team or three-team deal with the Knicks, Orlando assistant GM Otis Smith told The Post, "It's too early for me to say. We're still in the process."

Jamal Crawford and either Nate Robinson or David Lee would be headed to Orlando. The Knicks had hoped to get Cato's expiring contract to make the deal work under the salary cap.