Italian political crisis enters decisive week

ROME, Jan 27 (Reuters) - Italy's political crisis enters a decisive week with a snap election and a return to power of Silvio Berlusconi's centre right looking ever more likely after the collapse of Romano Prodi's government.

President Giorgio Napolitano granted himself a day of reflection on Sunday, planning to resume consultations with political leaders on Monday and end them on Tuesday evening.

Napolitano, an 82-year-old former communist, must decide whether to dissolve parliament and call an election for the spring or mandate someone to first try to form an interim government to enact electoral reforms.

Most centre-left parties, left in tatters by the government's collapse last Thursday, favour an interim government while the centre right wants an election.

"I think Italy does not need any government of national unity but a government that will get down to work immediately after Italians vote," said Berlusconi, who stands to return to power as prime minister after his electoral defeat in 2006.

A poll in Sunday's Corriere della Sera newspaper showed 61 percent of Italians want an early election and only 33 percent prefer some form of transitional government.

The bad news for the centre left did not end there.

Polls published by Corriere showed the centre left would win between 42.4 and 45 percent of the vote while Berlusconi's centre right would win between 54.5 and 57.6 percent.

Another poll showed the centre right could end up with a majority of between 11 and 35 seats in the upper house Senate. Prodi had a wafer-thin majority in the Senate.

TATTERED CENTRE LEFT

Italy's centre left, ranging from Catholics to communists, has been riven by deep policy divisions and personal rivalries, and their fear of facing an election soon is palpable.

While Prodi was in power, the nine-party coalition was often mired in infighting and mutual sabotage, arguing about everything from foreign policy to gay rights, from economic reforms to abortion.

Even fear that a government collapse would help Berlusconi return to power was not enough to stop the bickering and the government was felled when former Justice Minister Clemente Mastella, a Catholic, withdrew his small party's support.

The centre-left's flagship, the Democratic Party (PD) which merged the bloc's two largest forces as Prodi pushed for greater unity, is also threatened by divisions only three months after it was formed.

Napolitano held two days of talks with political leaders on Friday and Saturday. He could make his decision as early as Tuesday night when consultations end but some newspapers speculated he may reflect for another day.

Senate President Franco Marini has been tipped as a possible candidate to lead an interim government with cross-party backing and charged with making the electoral system more stable.

Prodi has said he is not willing to lead a new government.

A prolonged political impasse would likely delay sorely needed economic reforms, just as a global slowdown looms. In worried markets, the spread between Italian government bonds and German bunds widened to levels unseen in more than six years. (Additional reporting by Silvia Aloisi; Editing by Janet Lawrence)