UPDATE 3-Bersani ultimatum may bring new Italy election closer
* Centre-left leader says Beppe Grillo must declare intentions
* Bersani challenge may hold little water with 5-Star leader
* President opposes new election
By Steve Scherer
ROME, March 4 (Reuters) - Italy could be inching closer towards another election within months after centre-left leader Pier Luigi Bersani issued an ultimatum to anti-establishment comic Beppe Grillo to support a new government or return to the polls.
Last week's election, in which Grillo's 5-Star Movement won a huge protest vote, left no group with a working majority in parliament, making an alliance with a rival the only way out.
On RAI state television late on Sunday, Bersani underlined his opposition to two of the options floated - another technocrat government like the outgoing one led by Mario Monti or a coalition with Silvio Berlusconi's centre-right.
That would leave only one possibility to avoid elections - Grillo's backing for the centre-left, which won the lower house in the election but does not have enough support in the Senate.
"Now (Grillo) must say what he wants, otherwise we all go home, including him," Bersani said.
Grillo has repeatedly said his populist movement, which he refuses to call a party, would not give a vote of confidence to any government of established parties, although it could support individual laws.
"We have already said it several times: we won't give a vote of confidence to a government of political parties," the movement's newly named Senate leader, Vito Crimi, told its novice lawmakers on Monday during a meeting in Rome streamed on Grillo's blog.
He said the party could consider supporting a technocrat government such as the one headed by outgoing prime minister Monti.
The uncertainty in Italy, during a long limbo before talks to form a government begin after March 15, has unsettled international markets. The spread between Italian 10-year benchmark bonds and German bunds - a measure of investor confidence - widened on Monday to an almost three-month high.
Grillo last week called Bersani a "dead man talking" when he first made overtures to the 5-Star Movement, which became Italy's single biggest party taking a quarter of the vote.
Bersani's ultimatum may not work against Grillo and his tactics are apparently opposed by some of the leadership of his Democratic Party (PD).
The Genoese comic is widely believed to want to get back to the polls to wipe out the old order and boost his vote. He is also believed to fear his novice lawmakers could be suborned by cynical traditional politicians once they get into parliament.
"It's in his interest to go back to the ballot box as soon as possible," said Maurizio Pessato, vice chairman of polling institute SWG.
"Grillo can't win more than 8 million votes promising to get rid of the establishment and then immediately ally himself with the old guard," he added.
Nichi Vendola, leader of the leftwing SEL party which is allied with Bersani, criticised Grillo on Monday, accusing him of trying to win more votes by rejecting an alliance.
"Even he is at a crossroads. Either he accepts the challenge of a radical transformation of our country or he will be more of a politician than the others," Vendola said.
"If there is no agreement, it is better to return to the polls," Vendola added on his Facebook page.
PRESIDENT HOLDS KEY
President Giorgio Napolitano, who is responsible for navigating the new crisis, has said he wants to avoid snap elections. He says he is not constitutionally permitted to dissolve parliament because his mandate ends on May 15.
Parliament must elect a new president before then, but although an election could theoretically be called as early as June, extended negotiations to try to avoid a vote are more likely to push the date back to the autumn.
Another election could, in any case, produce the same deadlocked result unless electoral law is changed first.
One solution being floated is a temporary administration, perhaps of non-politicians, formed to pass a small number of pre-agreed reforms with elections in six months or a year.
A quarter of Italian voters are in favour of a new vote as a solution to the impasse and half predicted there would be an election within six months, an SWG poll said.
Analysts also point out that before formal negotiations begin, politicians including Grillo are trying to gain an advantage through statements to the media. These may not hold once Napolitano starts banging heads in the negotiations.
In addition, Bersani needs to get through a meeting of his party leadership on Wednesday, when he is likely to come under criticism for conduct of the campaign, in which his colourless performance threw away a previously dominant opinion poll lead.
The name of young Florence mayor Matteo Renzi, an exciting orator who challenged Bersani for the leadership last year, is again emerging as a possible replacement.
Grillo has rebuffed Italy's media, calling them an arm of the establishment, and over the weekend staged his latest stunt to arouse their anger. Wearing a hood over his head and hiding behind a pair of huge aviator sunglasses, Grillo took walks on the beach near his Tuscan villa, refusing to speak to reporters.
On Monday Grillo began meeting the 163 5-Star lawmakers to talk about strategy ahead of parliament's first session on March 15, and the subsequent consultations with Napolitano.
He named Senate leader Crimi and lower house leader Roberta Lombardi on Monday but there was trouble after newspapers dug out a blog post she wrote, praising some aspects of fascism.
In the post she wrote on Jan. 23, Lombardi wrote of "the ideology of fascism, which before it degenerated, had a national community dimension that tapped into socialism, with a very high sense of the state and the protection of the family."
Whether the remarks will cause any significant damage is unclear but they underline the potential dangers facing a party made up entirely of unknown novices.
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