* Mayor Iohannis seen as top challenger to leftist PM
* Pollsters expect Ponta/Iohannis runoff
* President Traian Basescu ends 2nd term, has no right to run
By Radu Marinas
BUCHAREST, Aug 11 (Reuters) - Romania’s centre-right opposition on Monday nominated an ethnic German provincial mayor from Transylvania as candidate for president, pitting him against leftist Prime Minister Victor Ponta who is favoured to win.
Parliament’s two largest opposition groups, the Liberals and the Democrat Liberals, voted unanimously to merge last month, hoping to boost their chances against Ponta in the Nov. 2 poll.
Romania’s ruling leftist alliance endorsed Prime Minister Victor Ponta’s candidacy in July, with opinion polls showing him leading but not by enough to avoid a Nov. 16 runoff ballot.
The newly chosen opposition candidate is Klaus Iohannis, 55, head of the Liberals and mayor of the medieval city of Sibiu, or Hermannstadt in German.
The city was established by German settlers in the 12th century and was Europe’s Capital of Culture in 2007.
“I came from Sibiu to Bucharest ... Romania can do more, Romania can do better,” Iohannis told reporters, offering a “decade of prosperity and rule of law.”
Ponta, 41, the leader of the Social Democrat Party, came to power in May 2012 in an alliance with the Liberal Party, toppling a centre-right government that undertook painful wage cuts and tax hikes at the height of the financial crisis.
A former prosecutor and amateur motor rally driver, opponents have in the past called on Ponta to resign over accusations of plagiarism surfaced. He has refused to do so.
Some analysts say Iohannis’ German background might serve him well in dealing with the West. He is a supporter of economic reform backed by international lenders under a European Union umbrella.
The next president will play a pivotal role in appointing a new prime minister and a government lineup to oversee International Monetary Fund-backed reforms under a 4 billion euros standby deal - with the loan deal review now being postponed pending the election.
A survey by pollster INSCOP ordered by daily Adevarul last month, showed Ponta had 43.6 percent support, leading Iohannis by more than 12 points. But neither contender would garner enough votes to avoid a Nov. 16 runoff ballot.
Another pollster, Irsop saw Ponta garnering 32 percent and Iohannis 21 percent. Both see Ponta winning the runoff.
Helped by successive IMF-backed aid deals since 2009 and by austerity policies, Romania has slowly emerged from recession to record one of the highest economic growth rates in the region.
Ethnic Germans have had a strong presence in Transylvania - the northwestern part of Romania that once belonged to the Austro-Hungarian Empire - since the Middle Ages.
But mass emigration began in the early 1970s and continued after Romania’s anti-communist revolution in 1989 that toppled communist dictator Nicolae Ceausescu. (Editing by Jeremy Gaunt)