Rousseff ally signals end to Brazil political row

* Main ally says won't insist on unbudgeted wage hike

* Will support ruling party bid to preside in lower house

* Power struggles likely to resurface

BRASILIA, Jan 6 (Reuters) - Brazilian President Dilma Rousseff's main coalition partner appeared to back away from a spat with the ruling party on Thursday, but said it wanted more say in the new government's decision-making.

The signs of reconciliation follow a power struggle between the centrist PMDB party and Rousseff's ruling Workers' Party, over prized posts in the government and in public enterprises [ID:nN04233415].

The dispute risked destabilizing Rousseff's 10-party center-left coalition days after she took office and could have threatened her legislative agenda. The PMDB complained it had not been given enough posts in the new government, prompting Rousseff to put political appointments on hold.

In an attempt to pressure Rousseff, the PMDB had threatened to push for an increase of the minimum monthly wage beyond a modest 5.9 percent hike to 540 reais ($319), which would have undermined her government's plan to curb public spending [ID:nN22114943].

But Vice President Michel Temer said on Thursday his party would not confront the government over its proposal.

"The PMDB won't oppose the government's proposal if it can't go beyond 540 reais," he told reporters in Sao Paulo.

Finance Minister Guido Mantega warned that Rousseff would veto any increase beyond its current proposal.

Temer also said the PMDB would abide by its pledge to support Rousseff's ruling Workers' Party in its bid to occupy the presidency of the lower house, the Chamber of Deputies.

That post is essential for Rousseff to push key bills, including a proposed overhaul of an unwieldy tax system that sours Brazil's investment climate.

But the PMDB, which has the largest number of seats in the Senate and is the No. 2 force in the chamber, demanded to participate in regular Cabinet meetings on political matters, Temer said.

Analysts say the early standoff shows how volatile Rousseff's political support is, even though she and Temer are likely to iron things out in the short run. Her hugely popular predecessor, Luiz Inacio Lula da Silva, often saw major legislative initiatives held hostage by recalcitrant allies.

"Get used to it. There will be a lot of political noise over the next four years," said Andre Pereira Cesar, a Brasilia-based political consultant.

"Conflicts, threats, accusations -- Dilma will require all the negotiating skills she can muster."

(Reporting by Raymond Colitt; Editing by Stuart Grudgings and Stacey Joyce)