Italy calls April election with Berlusconi in lead

By Stephen Brown and Philip Pullella

ROME (Reuters) - Italy called a snap election for mid-April on Wednesday, heralding the possible return to power of media magnate Silvio Berlusconi who has a solid poll lead over the collapsed centre-left coalition.

In a dramatic sequence of events even by Italian standards, Prime Minister Romano Prodi resigned last month after his allies defected. Attempts to set up an interim government failed and Berlusconi's calls for an immediate election prevailed.

Berlusconi, the 71-year-old owner of AC Milan soccer club, resisted President Giorgio Napolitano's bid for cross-party support to reform the messy election rules before a new vote.

"It is my regret today to have to call voters back to polling booths without those reforms having been approved," said Napolitano after he and Prodi, now caretaker premier, signed a decree dissolving parliament three years ahead of schedule.

The cabinet met afterwards to set the date for voting as April 13-14, near local elections which could be brought forward to "reduce the cost and inconvenience," Prodi said.

Berlusconi, the Forza Italia leader who has been prime minister twice before, is consistently ahead of the fragmented centre left in opinion polls, by as much as 16 points.

His rival will be Rome's 52-year-old mayor Walter Veltroni, who had supported an interim government to change voting rules that were widely blamed for the fragility of Prodi's government, Italy's 61st since World War Two.

While parliament has been dissolved about nine times before, only one has been shorter-lived than the 20-month legislature that gave Prodi such a rough ride after he won the closest vote in Italy's modern history.

The 68-year-old former European Commission president, twice victorious over Berlusconi in elections and twice brought down by fickle allies -- communists in 1998, now a Catholic party -- confirmed he would not be running for re-election.

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While industry urges politicians to bury their differences and work in the country's interests at a time when business and consumer confidence has sunk, growth is cooling and inflation is on the rise, parties were already maneuvering for the election.

Berlusconi's centre-right coalition was trying to recruit the small Catholic party whose defection sank Prodi, while the left voiced alarm at Veltroni's decision that his Democratic Party would ditch its allies and run alone.

The "Rainbow Left" group of communists and Greens urged the mayor to rethink his solo strategy and avoid "handing Berlusconi victory on a silver platter."

Veltroni, a former communist, said it was "time to take a risk," though he was open to parliamentary alliances later on with "the reform-minded left but not the radical left."

If he persists, the Rainbow Left will field its own candidate, speaker of the lower house of parliament Fausto Bertinotti -- the communist who brought down Prodi in 1998.

One priest urged the Roman Catholic country to avoid making the campaign "a time to insult and humiliate the adversary."

Father Antonio Rungi told Catholic news agency SIR that the right and left, Catholics and secularists, should "overcome their perennial conflicts" and campaign constructively.

Many economists say another government elected under current voting rules will prove just as unstable as Prodi's, who was undermined by constant bickering between centrist and leftist allies. But another free-spending Berlusconi government could undo Prodi's work on cutting the budget deficit.

With inflation hitting a decade high in January, consumers' dwindling buying power will be a campaign issue and politicians will be tempted to promise generous wage increases or tax cuts.

Berlusconi's spokesman Paolo Bonaiuti promised a "calm and constructive election campaign" focusing on issues like "rising prices and housing."

(Writing by Stephen Brown; additional reporting by Robin Pomeroy, Francesca Piscioneri and Paolo Biondi; Editing by Ralph Boulton)