BARI, Italy (Reuters) - Prosecutors recommended jail on Thursday for an Italian left-wing party leader in a move that could affect the outcome of next year's national election.

Nichi Vendola, leader of the Left, Ecology and Freedom party (SEL) and one of Italy's few openly gay politicians, said if he is found guilty of the charges of abusing his powers as governor of the southern region of Puglia he would retire from politics.

"If I am convicted, I will retire from public life," Vendola told reporters outside the courtroom, adding that he had done no wrong and expected to be acquitted.

The development could affect the outcome of next year's national election as the SEL commands around 5 percent of the vote, making it a significant presence in Italy's fragmented political landscape.

It also is the key ally of the center-left Democratic Party (PD), which is leading in the opinion polls.

Vendola is accused of improperly favoring the appointment of the head of department in a large hospital in Puglia's regional capital Bari, and the court in the southeastern coastal city is expected to give its verdict on October 31.

Italian prosecutors requested that he be sent to jail for 20 months for abusing his powers if found guilty.

Vendola is a fierce critic of unelected Prime Minister Mario Monti and says if the center-left wins the election Italy should abandon his reform agenda which, according to Vendola, targets ordinary people and is deepening Italy's recession.

Being targeted by prosecutors is relatively commonplace for Italian politicians and many shrug off investigations as no more than an occupational hazard which rarely results in a jail sentence actually being served.

(Reporting by Vincenzo Damiani, writing by Gavin Jones; Editing by Michael Roddy)