Italy government survives confidence vote despite party walkout

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By Giuseppe Fonte

ROME (Reuters) - The Italian government of Mario Monti survived a confidence vote on economic measures in the Senate on Thursday despite a walkout by Silvio Berlusconi's PDL party that indicated mounting political tensions ahead of an election next spring.

Monti's technocrat government won the vote by 127 to 17 votes with 23 abstentions after People of Freedom (PDL) senators abandoned the chamber because of earlier criticism of Berlusconi by Industry Minister Corrado Passera.

In an increasingly fevered pre-election atmosphere, Berlusconi dropped a strong hint late on Wednesday that he could go back on previous statements and run for a fifth term as prime minister in the election, expected in March.

In a television interview on Thursday, Passera expressed strong reservations about a return by Berlusconi.

"Anything which can make the rest of the world or our partners imagine that we are turning back is not a good thing for Italy," he told state broadcaster RAI.

In reaction, the PDL senators chose a largely symbolic action instead of abstaining or voting against, which would have brought down Monti's year-old government.

But their move represented a significant increase in tension ahead of the election as Berlusconi fights to reverse a collapse in the party's popularity. He is reported to be toying with the idea of forcing an election in February instead of March but has repeatedly changed his mind on what to do in recent months.

Monti's government, which has restored Italy's international reputation since he replaced Berlusconi last November, has called another confidence vote to speed up legislation in the lower house later on Thursday.

Italian shares turned negative and government bond yields rose because of the rising political tensions and market talk that Monti could resign.

The centre-left Democratic Party (PD), which has backed Monti with the PDL, said that if the prime minister did not have the full support of one of the two main members of the cross-party alliance that holds up the government, then he should go to see President Giorgio Napolitano and resign.

PD Senate leader Anna Finnochiaro said that the PDL's refusal to take part in the vote suggested the government no longer had a majority.

But PDL Senate leader Maurizio Gasparri insisted that the PDL would continue to act responsibly with a sense of duty to Italy.

(Reporting by Giuseppe Fonte, writing by James Mackenzie and Barry Moody)

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