By Gavin Jones

ROME (Reuters) - Italy's Prime Minister Silvio Berlusconi is expected to scrape through a vote of confidence on Friday, despite the scandals, economic stagnation and intense pressure from financial markets plaguing him and his administration.

Berlusconi was forced to call the vote, to be held in the Chamber of Deputies early afternoon, after his divided center-right government suffered a major embarrassment when it failed to pass a routine budget provision on Tuesday.

He is seen surviving for now, just as he has survived many such votes, because squabbling factions in his coalition are still not ready to replace him.

"If a group of deputies inside his People of Freedom party had a precise strategy then probably Berlusconi's days would be numbered, but we are not there yet," political commentator Sergio Romano told Reuters.

Analysts say even if the 75-year-old premier wins, it will be a matter of months only before a new crisis hits, and the country is likely to hold elections next spring, a year early.

Berlusconi told parliament on Thursday the fall of his government would be "a victory for those who want to see (Italy) fall into decline, catastrophe and the kind of speculation we have seen for months in Europe and Italy."

Many analysts see the opposite as true, and see Berlusconi's ineffectiveness in the face of crisis bringing either snap elections or an unelected government of technical experts --preferable to the current malaise.

Nicholas Spiro, head of debt consultancy firm Spiro Sovereign Strategy, said a "Berlusconi premium" has been built into Italy's borrowing costs.

His political demise "could trigger a favorable re-assessment of Italy in the minds of international investors, particularly if a non-partisan technocratic cabinet took office," Spiro said.

DISSENTERS

A number of center-right deputies were absent from Tuesday's vote, infuriating Berlusconi and feeding suspicions that some stayed away to raise their bargaining power in the coalition.

On Thursday, Berlusconi described the episode as an "accident" and insisted the center-right bloc was united.

He is facing internal challenges from a number of ministers, most notably form Economy Minister Giulio Tremonti, who are unhappy with his leadership and the damage his personal and legal woes have done to Italy's reputation.

The prime minister is on trial in four separate cases, accused of fraud, corruption and paying for sex with a minor.

President Giorgio Napolitano entered the fray this week, expressing deep concern about the viability of government and demanding a "credible response" to Italy's acute problems.

A Reuters survey of about 20 analysts said on Thursday that Italy is already in recession, will barely muster any growth in 2012 and will miss the government's fiscal deficit targets.

Its sovereign debt has been downgraded in the last month by Standard & Poors, Moody's and Fitch, and since early August it has relied on the European Central Bank to buy its bonds to prevent yields rising to unsustainable levels.

(Editing by Louise Ireland)