UPDATE 2-Italy's Monti seals investment deal with Qatar

* Qatar agrees to 2 bln-euro investment fund for Italian

firms

* Venture will focus on food, fashion, luxury

* Monti offers political reassurance, says next government

will be responsible

DOHA, Nov 19 (Reuters) - Qatar agreed on Monday to invest as

much as 1 billion euros ($1.3 billion) in Italian companies,

aiding efforts by Italy's Prime Minister Mario Monti to breathe

life into a weak economy.

Italy has joined a growing list of European states looking

to tap Qatar's vast wealth to support national industries that

are struggling to finance their way out of recession.

A joint venture between Italy's strategic investment fund

and state-owned Qatar Holding will invest in sectors including

food, fashion and luxury goods, furniture and design, tourism

and leisure, the Italian fund said in a statement on Monday.

The venture will have capital of up to 2 billion euros ($2.5

billion) provided equally by both partners over the first four

years, according to the agreement signed during Monti's visit to

the small, energy-rich Gulf state.

The "IQ Made in Italy Venture" will start with 300 million

euros of capital.

"We have four or five ideas (for investment in Italy) we are

studying at the moment," Qatari Prime Minister Sheikh Hamad bin

Jassim al-Thani said at a news conference without elaborating.

Qatar is also preparing to sign another agreement with Italy

worth 1 billion euros aimed at small and medium-sized

enterprises, Sheikh Hamad said, adding that Qatar would

participate in half that amount.

Monti's visit to the Gulf was partly aimed at attracting new

investment both for Italian sovereign bonds and for companies

which have had serious problems raising capital as the financial

crisis has squeezed bank balance sheets and cut off lending.

"It's significant that Italy now seems to be proactive in

attracting long-term institutional investors and this venture

with Qatar clearly signals that," said Rachel Zeimba, senior

analyst and sovereign wealth fund expert at Roubini Global

Economics in London.

"It is not clear if the investments are restricted to listed

companies alone but it proves that Qatar sees long-term value in

sectors such as food and fashion in the country and wants to

play in on these themes," she said.

Sheikh Hamad said Monti's reform drive since taking office a

year ago had helped the Italian economy and been an important

step in strengthening its overall economic system.

"We believe Italy is a significant partner for Qatar in

Europe," he said.

Monti, called in to head an unelected technocrat government

a year ago at the height of the financial crisis, has faced

growing speculation about his political future after elections

expected in March.

He said nothing about his own plans but repeated on Monday

that the next government would continue the reform path.

"There are no guarantees about what comes after the Italian

elections. But I am confident that we will always have a

responsible government," he said.

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