* Both left and right worried by Monti candidacy
* Monti runs big risks if he stands
* Berlusconi fighting to restore centre-right
By Barry Moody
ROME, Dec 20 Silvio Berlusconi joined forces with his leftwing opponents on Thursday to warn Mario Monti against standing in the coming election, as uncertainty over the outgoing premier's plans stoked political tension in Italy.
Berlusconi told a radio phone-in programme it would be "morally questionable" for Monti to run, emphasising the risks of him being caught in right-left crossfire if he throws his hat in the ring and loses his status of being above the fray.
Monti, who has governed as a non-partisan technocrat since last year, is expected to announce his plans after the 2013 budget is approved and parliament is dissolved, but has refused to say anything before then, fuelling fevered speculation over what role he will play in the election.
On Thursday, he made what sounded like a pre-campaign speech, telling Fiat car workers in southern Italy that it would be irresponsible for Italians to throw away the sacrifices they have made during a year of debt cutting austerity under his government.
Berlusconi, bidding for his fifth term as prime minister, has repeatedly attacked Monti's policies and promised again on Thursday to abolish a hated housing tax he imposed.
Some reports say Monti will announce his candidacy at the weekend but political sources told Reuters that he was preparing to endorse one big centrist group or several smaller ones which would sign up to policies continuing the fiscal discipline he has imposed over the last year to calm a financial crisis.
Such groups, ranging from the existing UDC party of Pier Ferdinando Casini to a new civic movement founded by Ferrari boss Luca Cordero di Montezemolo, are campaigning for Monti as next prime minister, effectively making him a candidate if he endorses them.
Entering the campaign could pose many risks for Monti, including reducing the chances that he would become Italy's president if he does not succeed in winning the premiership after an election now almost certain to be held on Feb. 24.
Pollsters say the centrist groupings associated with Monti would increase their vote from below 10 percent to up to 15 percent if he takes the field, but that might not be enough to guarantee a major post-election role for the former European commissioner.
The centre-left Democratic Party is likely to win up to 35 percent of the vote according to pollsters and is currently considered certain to win the election.
But it may need to form an alliance with the centre to ensure control of the upper house and calm market fears that it would follow leftwing policies despite its stated commitment to fiscal discipline.
BERLUSCONI AGAINST MONTI CANDIDACY
Berlusconi expressed agreement with senior centre-left politician Massimo D'Alema who said a week ago it would be illogical and questionable for Monti to stand against a party that had supported his reforms for the last year.
Other critics suggest it would be just as questionable for Monti to campaign at the same time as he remains as caretaker prime minister after his resignation.
Berlusconi said on the radio programme: "I would be surprised if Monti participated directly in the election."
The billionaire media magnate said it would not be in Monti's interests to head up weak centrist groups.
Both the centre-left and Berlusconi's centre-right fear he will suck votes away from them, and are therefore likely to attack him personally during what promises to be a no-holds-barred campaign.
Monti restored respect for Italy and brought its dangerously ballooning borrowing rates under control after taking over from the scandal-plagued Berlusconi in November 201l.
But while foreign investors, business leaders and European partners are desperate for Monti to return, his painful austerity policies of tax hikes and spending cuts have made him unpopular for many voters.
A poll this week by the SWG institute showed 61 percent of Italians opposed him standing for election.
Formerly immune from the wide contempt for corruption-tarnished politicians, Monti has recently become a political football.
Berlusconi, whose party is polling around 16.5 percent -- less than half than when it won the last election in 2008 -- says he will stand down if Monti agrees to lead the centre-right, something considered virtually impossible.
Meanwhile Berlusconi, for two decades Italy's most skilful political operator, has used all his huge media power to push himself to centre stage since he declared he would stand in the election two weeks ago, appearing almost daily.
Although he has lost some of his unrivalled powers of communication, Berlusconi's return to the field has pushed his party's ratings up by three percent as he promises to abolish the housing tax and accuses Monti of being Germany's puppet.
In Thursday's radio show he said the centrists with or without Monti would only increase the victory of the centre-left in the election and split the "moderate" vote.
Berlusconi, awaiting a verdict early next year in a trial in which he is accused of paying an underage prostitute, has little or no chance of winning the election but is trying to gain enough votes in the upper house to sabotage a centre-left government after the election.
To this end he is working simultaneously to rebuild his alliance with the separatist Northern League and to stop moderates in his own party breaking away to join the pro-Monti centre.
He is helped by the current electoral law which grants party leaders total control over who can stand for parliament, giving him huge powers of patronage.