Italy to dissolve parliament and call elections

ROME (Reuters) - Italy's president was due to dissolveparliament on Wednesday and call snap elections, likely inmid-April, that could mark a return to power of media magnateSilvio Berlusconi.

In a dramatic sequence of events even by Italian standards,Prime Minister Romano Prodi resigned last month after coalitionallies defected, attempts to set up an interim governmentfailed and Berlusconi's calls for an immediate electionprevailed.

The 71-year-old billionaire, who has been prime ministertwice before, has kept a consistent lead in opinion polls,leading Prodi's fragmented centre left 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 rulesthat were widely blamed for the fragility of Prodi'sgovernment, Italy's 61st since World War Two.

While parliament has been dissolved about nine timesbefore, only one has been shorter-lived than the 20-monthlegislature that gave Prodi such a rough ride.

Now caretaker prime minister, Prodi sees President GiorgioNapolitano at 10:30 a.m. British time to counter-sign thedecree dissolving parliament some three years ahead ofschedule. Prodi's cabinet will then set a date for voting,likely to be April 13 and 14.

TIME FOR INSULTS

While industry urges politicians to bury their differencesand work in the country's interests at a time when business andconsumer confidence has sunk, growth is cooling and inflationis on the rise, parties were already manoeuvring for theelection.

Berlusconi's centre-right coalition was trying to recruitthe small Catholic party whose defection sank Prodi, while thehard left, offended at Veltroni's decision that his DemocraticParty would run alone, considered fielding their own candidate.

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

Father Antonio Rungi told Catholic news agency SIR that theright and left, Catholics and secularists, should "overcometheir perennial conflicts" and campaign constructively.

Many economists say another government elected undercurrent electoral rules will prove just as unstable as Prodi's,who was undermined by constant bickering between centrist andleftist allies. But another free-spending Berlusconi governmentcould undo Prodi's work on cutting the budget deficit.

With new data showing inflation hit a decade high inJanuary, consumers' dwindling buying power will be a centralelection issue, and politicians will be tempted to promisegenerous wage increases or tax cuts.

(Editing by Ralph Boulton)