LEAD: Italy president expected to ask Mario Monti to form government

Nov 13, 2011, 11:13 GMT

Rome - Italian President Giorgio Napolitano was holding consultations with political leaders on Sunday to sound out their support for a government to replace the one of outgoing Prime Minister Silvio Berlusconi.

Napolitano began talks with at Quirinale Palace, his residence in Rome, with representatives of some of the smaller parties in parliament.

The Italian head of state was scheduled to meet Berlusconi and a delegation of the outgoing premier's People of Freedom party at around 5 pm (1600 GMT).

Berlusconi resigned Saturday after parliament gave final approval to austerity measures demanded by the European Union and has signalled his conditional support for a government led by former European Union commissioner, Mario Monti.

Napolitano has been pushing Monti's candidature - a move aimed at restoring Italy's credibility in the face of market pressure over country's debt. The president has received encouragement from US President Barack Obama, French counterpart Nicolas Sarkozy and the EU.

Napolitano was expected by late Sunday to give the 68-year-old Monti, a widely respected economist, the mandate to form a new technocratic government.

Monti has yet to make any public statements on his possible nomination as premier, but is believed to favour a cabinet made of non-partisan technocrats, including economists and academics, to lead Italy until the next general elections which are due in 2013.

On Sunday morning, he attended Catholic mass in central Rome, before retiring to his Senate office which he has occupied since Napolitano named him a life-senator on Wednesday.

'I'm feeling very well,' Monti said, replying to a question as he left mass.

Berlusconi, who has dominated Italian politics over the last 17 years, has indicated the PDL would give interim support to a Monti-led government on the condition that it resigns once completing the implementation of EU mandated economic reforms, media reports said.

Italy's centre-left opposition parties have also signalled their support for a Monti-led government.

However, the Northern League party, the junior partner in Berlusconi's ruling coalition has said it would oppose any government not led by a member of the coalition.

'I don't exclude early elections,' outgoing Interior Minister, Roberto Maroni of the Northern League, said before his party was scheduled to hold talks with Napolitano as part of the president's round of consultations.

Following his eventual nomination as premier, Monti would have to present his proposed cabinet before parliament which would then vote on whether to approve it.

Markets reacted favourably to speculation about a Monti-led government on Friday. The benchmark 10-year yields on Italian government bonds fell 27 basis points to 6.7 per cent, below the peak 7 per cent reached on Wednesday.