Silvio Berlusconi faces local election setback

ROME (Reuters) - Prime Minister Silvio Berlusconi looked set to suffer a big defeat Monday as early results from local polls raised the prospect of his Centre right losing a string of key cities, including the financial capital Milan.

With some 33 percent of ballots counted, Milan's Centre-right mayor Letizia Moratti had 41.6 percent support against 48.1 percent for her Centre-left rival Giuliano Pisapia.

Berlusconi had campaigned frenetically for an outright win in his home town and power base, which the Centre right has easily held for nearly 20 years. Aides described him as "surprised and saddened" by the early results.

If the results were confirmed, it would mean a second round on May 29-30, giving the Centre left its best chance since 1993 of winning the city where Berlusconi built his business empire and launched his political career.

It would also prove right opinion polls showing Berlusconi's popularity has been undermined by a sex scandal, three corruption trials and a faltering economy.

His main ally, the pro-devolution Northern League, also fared far worse than expected in its own heartland.

Early returns showed the Centre left sweeping Turin and heading for a first-round victory in its stronghold of Bologna, while Berlusconi's PDL party was ahead in Naples.

The four cities were the most important contests in elections in 1,310 towns and 11 provinces, which are seen as a crucial test for Berlusconi midway through his term.

"The wind in the north is blowing against the PDL and the League," said Pierluigi Bersani, leader of the largest opposition party, the PD.

Nearly a quarter of Italians were eligible to cast their ballot in the elections Sunday and Monday. Turnout was slightly lower than in the past, but still high at 71 percent.

FOUR TRIALS

Four concurrent trials, including one on charges that he paid for sex with an underage prostitute, have pushed Berlusconi's approval rating to about 30 percent, the lowest since he swept to power for the third time in 2008.

He appeared in court Monday in a hearing into bribery charges as the vote was under way. He denies any wrongdoing and says politically biased magistrates are bent on destroying him.

Besides his legal woes, he is also taking the heat for failing to revive Italy's low growth.

The euro zone's third largest economy expanded by only 0.1 percent in the first three months of the year, badly lagging Germany, France and even crisis-hit Greece.

The League, vital for Berlusconi's survival after he split from long-time ally Gianfranco Fini, has marked its distance from the premier on several issues in recent weeks, notably opposing Italy's involvement in the NATO bombing of Libya.

Berlusconi had aggressively hit the campaign trail, turning the election into a vote on him rather than local issues.

Days before the vote, Berlusconi raised the political temperature by calling prosecutors a "cancer of democracy" and saying the opposition "don't wash much."

The fragmented Centre left, which had so far failed to capitalise on Berlusconi's troubles, said the polls showed that strategy had backfired and that the tide was turning.

Not everything was good news for the opposition however.

In Milan, it only belatedly rallied behind frontrunner Pisapia, who was not its designated candidate.

And in Naples, where a long-running crisis over uncollected garbage has embarrassed the Centre-left local authorities, its man was overshadowed by another leftist candidate and will be most likely excluded from a run-off.

(Editing by Barry Moody and Mark Trevelyan)