Prospect of new Italy vote heightens as Grillo faces ultimatum

ROME (Reuters) - Italy appeared to be inching toward another round of elections on Monday after centre-left leader Pier Luigi Bersani issued an ultimatum to 5-Star Movement leader Beppe Grillo to support a temporary government or "we'll all go home".

Appearing on RAI state television late on Sunday, Bersani ruled out another technocrat government like the last one, led by Mario Monti. Last week's vote left no one with a working majority in parliament, making an alliance with a rival the only solution to forming a government.

"Now (Grillo) must say what he wants, otherwise we all go home, including him," Bersani said.

Financial markets are watching Italy closely and the spread between Italian 10-year benchmark bonds and German bunds - a measure of investor confidence - widened on Monday to an almost three-month high as the country entered its second week of gridlock.

Grillo last week called Bersani a "dead man talking" when the centre-left leader made first overtures to Grillo's populist movement, which became Italy's single biggest party in its first national test.

On Monday and Tuesday, Grillo will meet with the 163 new 5-Star lawmakers, who have never before been in parliament, to talk about their strategy ahead of parliament's first session on March 15, and subsequent formal consultations with President Giorgio Napolitano on the formation of a government.

Napolitano, who has the power to dissolve parliament and select prime ministers, has said he wants to avoid an immediate round of new elections.

(Reporting by Steve Scherer; Editing by Kevin Liffey)

Source: http://news.yahoo.com/prospect-italy-vote-heightens-grillo-faces-ultimatum-091130173--business.html

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