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Bersani to Meet Napolitano as Ally Says Still Hope for Deal

March 28 (Bloomberg) -- Pier Luigi Bersani will meet Italian President Giorgio Napolitano later today as an ally in his Democratic Party said he still could win the support he needs to convince the head of state to give him the premiership.

Bersani told reporters in Rome he’s finished talks with lawmakers and will take a few hours to reflect before heading to the presidential palace “by evening.” The meeting at 6 p.m. in Rome with Napolitano will conclude a week in which Bersani, 61, sought to overcome a shortfall of support in parliament and get enough lawmakers to form a government.

“We think there’s still room to resolve it in a positive way,” Luigi Zanda, head of the Democratic Party in the Senate, said after meeting Bersani today. “It often happens that the most delicate affairs are resolved in the last phase.”

Lawmakers are under pressure to overcome a deadlock and form a government capable of stimulating the weak economy and shielding Italy from fallout from the financial crisis in Cyprus. Bersani’s proposal of an alliance was rejected yesterday by Beppe Grillo’s Five Star Movement. His talks with Silvio Berlusconi’s People of Liberty haven’t produced an agreement so far.

“A Bersani failure to form a new government, which seems probable at this point, does not mean that Italy is headed for new elections at the earliest available date,” Roberto Perli, managing director at International Strategy & Investment Group in Washington, said in a report. “The president of the republic in that case will give a mandate to someone else and the negotiations will continue.”

Bond Yields

Italian 10-year bond yields fell 2 basis points to 4.76 percent at 1:55 p.m. in Rome. The difference in yield with similar-maturity German bunds narrowed 2 basis points to 3.48 percentage points.

The terms of Bersani’s proposal to Berlusconi’s People of Liberty, or PDL, were rebuffed late yesterday by the group’s general secretary, Angelino Alfano. Commenting in a blog post, Alfano said the proposed deal was unacceptable and it’s up to Bersani to come up with a new plan to gain consensus.

“The issue is closed and it’s Bersani who closed it,” Alfano said. “Bersani is in the dead-end street he turned into. It’s up to him now to turn the situation around.”

Bersani and Berlusconi, a billionaire and three-time premier, have room for common ground since both want to maintain influence after losing voters in elections last month to Five Star. Parliament, in addition to forming a new government, has the task of selecting the next president as Napolitano’s seven-year term comes to a close.

Parliament Stalemate

The stalemate in parliament was created by the emergence of Five Star, which won a quarter of the votes in the Feb. 24-25 election and upset the traditional balance of powers. Grillo’s upstart party campaigned for fiscal stimulus and pushed to sweep established politicians out of power.

A Bersani confidence vote would get “no” ballots from Five Star in the Senate, Vito Crimi, the party’s leader in the upper house, said yesterday after meeting with the Democratic Party leader.

Bersani has a majority in the lower house of parliament, while the Senate is divided into three blocs. Bersani controls the biggest contingent in the upper house, followed by Berlusconi and then Grillo.

To contact the reporter on this story: Andrew Frye in Rome at afrye@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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