Countdown starts towards new Italy government

ROME, May 2 (Reuters) Italian Prime Minister Silvio Berlusconi was expected to concede defeat by handing in his resignation today, starting the countdown to the formation of a new government headed by Romano Prodi.

Berlusconi, who earlier contested the result of the April 9-10 poll, was set to see President Carlo Azgelio Ciampi in the early afternoon following a cabinet meeting.

Ciampi has been under pressure to end Italy's post-election political stalemate.

With credit rating agencies pushing for prompt action to tackle the country's struggling economy and wayward public finances, Italy could have a centre-left government led by Prodi in place by the end of the week, under a best-case scenario.

The decision rests squarely on the shoulders of the 85-year-old Ciampi.

Ciampi, whose own term expires in mid-May, must decide whether he will give Prodi the mandate or, as he has indicated in the past, leave the task to the next president.

Prodi has said his cabinet team would be ready by Friday, although he made it clear that it was up to Ciampi to decide.

''If I get the mandate soon, I have to have my list of ministers ready. If I get it later, I will just have to hold on to the list for a while,'' Prodi told reporters yesterday.

He stressed he was ''not dictating a date to Ciampi''.

Prodi's coalition, ranging from communists to centrist Roman Catholics, won the election by the smallest margin in modern Italian history. Berlusconi announced he would quit only after centre-left speakers of parliament were elected at the weekend.

Prodi, a former European Commission president, has stressed that Italy could give the world and markets a sign of stability if his government gets down to business quickly.

If Ciampi, a former central bank governor, agrees, he could begin ritual consultations with political leaders tomorrow and give Prodi the mandate by the end of the week.

Prodi has said his objective in speeding up decisions on the make-up of his cabinet was to be prepared for a call from the presidential palace.

Another option would be to move up the election of the new president, chosen by both houses of parliament and representatives of Italy's 20 regions, to next week and let him give Prodi the mandate.

Speakers of both houses of parliament were elected on Saturday. But the four ballots needed in the upper house Senate underscored the difficulties Prodi could have with his slim majority there.

REUTERS DKS RK0448