* Bersani says will meet parties next week
* He must report back to Napolitano
* Bersani has only slim chance of winning enough support
* Berlusconi calls for grand coalition of centre-left and
By James Mackenzie and Barry Moody
ROME, March 22 President Giorgio Napolitano
asked centre-left leader Pier Luigi Bersani on Friday to assess
whether he can win enough support in Italy's divided parliament
to form a government and end the political deadlock left by
elections last month.
After two days of consultations with political leaders,
Napolitano said he had given Bersani a mandate to talk to other
parties and see if he can get the guaranteed support needed for
a vote of confidence in both houses of parliament, where no
single group has a workable majority.
The stalemate has left Italy, the euro zone's third-largest
economy, facing the prospect of weeks of uncertainty as the bank
crisis in Cyprus has reawakened fears of a renewed bout of
financial market turmoil in the currency bloc.
Bersani, whose centre-left alliance won control of the lower
house but not of the Senate, must report back to Napolitano as
soon as possible on whether he can get enough support from rival
political forces to form a governing majority.
The 61-year-old former communist said he would seek to form
a reform-minded government "with the maximum balance and
He has said he hopes to present a limited programme of
economic and institutional reforms that could be backed by all
forces in parliament but he faces formidable obstacles after a
bitter election campaign.
Bersani until now has sought support from the
anti-establishment 5-Star Movement and refused overtures from
Berlusconi, who wants to share power in a grand coalition
between centre-right and centre-left.
However he has been repeatedly and rudely rebuffed by the
5-Star leader, ex-comic Beppe Grillo, who says his group will
not back any government formed by one of the mainstream parties.
In a television interview on Friday evening, Berlusconi said
Bersani's only chance of forming a government was to go into
coalition with his centre-right group.
"It would put Italy in grave danger if Bersani were to
insist on the wrong route, we would not have a government but a
leap into the dark," he said.
In his speech, Napolitano noted Berlusconi's call for a
coalition, but said the formula had failed in December when the
centre-right withdrew support from technocrat premier Mario
Monti, who had been supported by both right and left.
Bersani said he would seek broad support from parliament but
also from unions and other groups. He met the speakers of
parliament on Friday and is due to meet unions and employers on
Saturday before meeting political parties next week.
"I will certainly go to work with consultations that are
necessary with the forces in parliament but without neglecting
contact with the main groups in society," he said.
He gave no indication of how long the process would take but
insisted he would not be rushed. "It's a difficult situation but
I will take the time needed," he said.
If no durable accord can be reached, Italy faces a return to
the polls within months, delaying any prospect of substantial
reform to its stagnant economy, stuck in its longest recession
in 20 years.
Financial markets have been watching the political
uncertainty closely although so far there has been no sign of
the panic that gripped investors during the 2011 crisis which
brought down the last Berlusconi government.
The main barometer of confidence, the spread between yields
on Italian 10-year government bonds and their more stable German
counterparts, closed the week at 314 points, well short of the
level of more than 550 seen in late 2011.
However Italy's 2-trillion-euro ($2.60-trillion) public debt
is vulnerable to any bond market turbulence and public finances
have deteriorated sharply during the recession, despite the tax
hikes and spending cuts imposed by Monti.
Napolitano said Italy must move quickly but carefully to
form a government capable of addressing deep economic and social
problems. He said the election had shown there was discontent
with traditional politics in Italy and called for national unity
and an end to paralysing conflict between the parties.
Time is running out, however. Apart from the pressure from
financial markets, parliament must begin the process of electing
a successor for Napolitano by mid-April in time to complete the
process by the time his term ends on May 15.
The head of state rejected suggestions that the process of
forming a government was taking too long. A month has passed
since the election but Napolitano said the country was moving as
quickly as possible within constitutional restraints.
Underlining the tense political climate, the PDL is due to
hold a rally on Saturday to protest against two trials
Berlusconi faces over his appeal against a tax fraud conviction
and separate charges of paying for sex with a minor.