ROME Italian President Giorgio Napolitano appealed to political leaders on Sunday to work together to form a government, but his appeal fell on deaf ears and pressure grew for a new poll after last month's deadlocked election.
The threat of months of political instability following the inconclusive ballot has triggered warnings across Europe that Italy cannot afford to delay urgent reforms to shore up its massive public debt and boost its sickly economy, now stuck in recession for over a year.
Napolitano is due to begin consultations with political leaders on Wednesday to see if there is any chance of establishing a government after the election which left parliament split between three deeply opposed forces.
Pier Luigi Bersani, leader of the centre-left Democratic Party (PD), won control of the lower house but fell short in the Senate leaving him dependent on the support of his rivals if he is to form a government.
Bersani said he would tell Napolitano he would not try to reach any set deals in advance but would present proposals to parliament based on attacking corruption and creating jobs.
"The path is very, very narrow. I think I can say that other paths would turn out to be even narrower," he said.
However prospects of a deal with either former premier Silvio Berlusconi or the anti-establishment 5 Star Movement, which holds the balance of power, appear remote, raising fears of a return to the polls, possibly as early as June.
Both Angelino Alfano, secretary of Berlusconi's centre-right People of Freedom party, and 5-Star leader Beppe Grillo prophesied a short life for parliament, which held its first sittings to elect house speakers on Friday and Saturday.
"We are in favor of going to the vote as soon as possible so that Italians can give their opinion and we can begin a new legislature," Alfano told RAI television in an interview.
Before that can happen, parliament must elect a successor to Napolitano, whose mandate ends on May 15. An outgoing president does not have the power to dissolve parliament, so any new elections would have to be called by his successor.
Alfano's offer to cooperate with Bersani as long as his party was allowed to pick the next president was rejected out of hand by PD officials.
Despite some flutters, financial markets have so far been relatively relaxed in the face of the political stalemate, showing none of the panic seen during the crisis which drove Berlusconi from power in 2011.
However Italy's 2-trillion-euro public debt remains vulnerable to the kind of volatility which panicked investors less than two years ago with tensions over Cyprus highlighting the fragility of market confidence in the euro zone.
In an address commemorating the 152nd anniversary of Italian unification in 1861, Napolitano said the country should not "divide into factions opposed on everything" but his call for unity bore no fruit.
Bersani succeeded in getting his candidates elected as speakers of the lower house and Senate, helped by abstentions and a handful of votes from rebels in the 5-Star Movement but the vote only underlined the weakness of his position.
New Senate speaker Pietro Grasso, a top anti-Mafia judge who made his name fighting organized crime in Palermo, and lower house speaker Laura Boldrini, a former spokeswoman for the UN High Commissioner for Refugees, represent a change from the career politicians who traditionally took such roles.
Even so, the result of the contest for the Senate speaker showed clearly that Bersani would not be able to win a confidence vote in parliament, with Grasso elected with 137 votes, 21 short of a majority in the 315-seat upper house.
Grillo, who has ridden a wave of public disgust with the mainstream parties, dismissed the appointment of candidates from outside the political inner circle as a "fig leaf" and Alfano said the result made it clear Bersani could not govern.
"The figures show that Bersani cannot obtain any mandate to form a new government since he quite obviously has no majority in the Senate," he said.
Bersani himself has ruled out any deal with Berlusconi, who is on trial on charges of tax fraud and paying for sex with a minor and under investigation over separate political bribery allegations.
He said Italy, mired in recession and with unemployment, especially among the young, at a record, was a "pressure cooker" and any deal with Berlusconi would be inherently unstable. "You can't put a flimsy lid on a pressure cooker," he said.
However his attempts to court the 5-Star Movement have been rebuffed by its fiery leader, who rejects any deal and who was angered by the mini rebellion in his party on Saturday, demanding that those who voted for Grasso should "take the consequences".
(Editing by Matthew Tostevin and Stephen Powell)