* Budget approval held up, threatening election delay
* Monti expected to say at weekend whwther he will stand
* Media say Monti is close to deal with centrists
ROME, Dec 19 (Reuters) - Italy's president gave a strong
indication on Wednesday that next year's election would be held
in late February, as the country prepares to replace a
technocrat government that has ruled for over a year.
President Giorgio Napolitano said he had "taken account" of
a recommendation by the interior minister that the election be
held on Feb. 24 following two days of wrangling over a budget
law that must be passed before parliament is dissolved.
The 2013 budget had been expected to pass by Friday but was
delayed when Silvio Berlusconi's centre-right People of Freedom
(PDL) party demanded more time to consider the bill.
PDL secretary Angelino Alfano agreed to the election date,
indicating that his party would probably allow the budget to
pass by the weekend and allow the election process to begin.
The delay to the budget bill caused Prime Minister Mario
Monti to postpone an end-of-year news conference at which he had
been expected to announce whether he intends to stand in the
A source close to Monti said he would not make any comment
on his future until parliament was dissolved.
Italian news agencies quoted Andrea Riccardi, a government
minister considered close to Monti, as saying he believed the
premier would announce his decision on Saturday or Sunday.
The election, originally due in April, was brought forward
after Berlusconi's party withdrew parliamentary support for
Monti, prompting the former European commissioner to announce he
would resign as soon as the budget was passed.
The leader of the centre-left Democratic Party, which is
leading in opinion polls, called the delay in approval of the
budget "indecent and unacceptable".
"You cannot make legislation like the budget law subject to
party agendas," Pier Luigi Bersani said.
The PDL has been trailing badly in the opinion polls, but
rose three points in a survey carried out after Berlusconi
announced he would run. It hopes that his proven campaigning
skills will reverse a months-long decline.
Financial markets shrugged off the uncertainty. The main
measure of investor confidence, the spread between Italian and
German 10-year bond yields, dropped below 300 basis points to
reach the levels seen before Monti announced his resignation.
Monti, appointed a year ago to lead a technocrat government
at the height of a debt crisis that threatened the entire euro
zone, is widely seen outside Italy as the best guarantor of
He has so far declined to respond publicly to pressure from
Italy and abroad for him to seek a second term, but has done
nothing to dampen growing speculation that he will stand.
Without citing any sources, Italian newspapers said on
Wednesday that Monti was ready to back a new centrist grouping
set up by Ferrari Chairman Luca Cordero di Montezemolo, which
wants him to remain in office.
It was not clear whether he would run as its candidate for
prime minister or take a more back-seat role by publicly
endorsing a party or setting out a recommended policy programme.
"Monti has taken his decision but he is respecting the rules
and will wait for the dissolution of parliament," Pierferdinando
Casini, head of the UDC party, which is part of the broad
centrist alliance, told reporters.
Although Monti is the favourite of the business elite and
Italy's European partners, his image among ordinary Italians is
much less favourable and, according to a survey this week, 61
percent do not think he should stand for election.
He enjoys wide respect for restoring Italy's international
credibility after the scandal-plagued Berlusconi era, but many
say the mix of tax hikes and spending cuts he has imposed to
rein in public finances have deepened a recession.
The same poll, by the SWG polling institute, put support for
a centrist coalition including Montezemolo's group at 9.3
percent, although it indicated that figure would rise to 15.1
percent if Monti were to lead the alliance.
The centre-left Democratic Party, which has supported Monti
in parliament, has been openly sceptical about the idea of a
candidacy by the unelected premier, which it says risks
tarnishing his authority.