By Naomi O'Leary and Steve Scherer
ROME (Reuters) - The re-election of Italy's president has raised the prospect of an end to the two months of political stalemate that have followed the general election, with a move to form a government foreseen within days.
A broad agreement between traditional political groups on the left and right to re-elect Giorgio Napolitano handed the 87-year-old the leverage to pressure opposing parties to form a government or face a snap election.
The February election split parliament between the center-left, the center-right, and the anti-establishment 5-Star Movement, requiring at least two of them to forge an alliance to create a workable majority in parliament.
"It's clear that within the week an agreement on a government will be reached," said Rocco Buttiglione, a high-ranking member of the centrist Civic Choice group led by outgoing Prime Minister Mario Monti. "Napolitano is very strong right now and the parties are rather impotent."
Any government will be under pressure to address popular frustration with a prolonged recession in the euro zone's third-largest economy, which has scarcely grown in 20 years and is grappling with the worst unemployment in decades.
Napolitano, the first president in Italy's history to be asked to serve a second term, will likely spell out his strategy when he addresses parliament on Monday, but he made it clear before being re-elected that he favored the formation of a government to a potentially destabilizing new vote.
A source in the presidential palace told Reuters Napolitano could either hold a quick round of consultations starting on Tuesday or skip them altogether because he has already sounded out party leaders officially twice since the deadlock began.
Napolitano could ask a political figure - instead of a technocrat like Monti - to try to form a government as soon as Tuesday, and the source said the president's re-election meant that there was a clear intent to form a government rather than head toward another election.
But the idea of a right-left government was strongly criticized on Sunday by the leader of the 5-Star Movement, Beppe Grillo, who described the agreement to elect Napolitano as a desperate attempt to retain power by a discredited elite.
The 5-Star Movement had called on the center-left Democratic Party (PD) to back its candidate for president, left-wing academic Stefano Rodota. The PD instead joined center-right leader Silvio Berlusconi and Monti to support Napolitano.
Grillo, whose vow to kick out the old guard allowed his 5-Star Movement to win one in four votes in its first national election, called the presidential vote "a cunning little institutional coup".
Thousands of 5-Star Movement supporters gathered on Sunday at a rally to protest Napolitano's win, and then marched through Rome, some holding signs that read: "Napolitano is not our president".
On Sunday, politicians and the Italian media quickly began speculating on who could lead the next government.
The PD, the biggest group in parliament, fell into disarray during the presidential vote when party rebels scuppered two candidates proposed by leader Pier Luigi Bersani, forcing him and the entire leadership to resign.
The chaos means the party may be eager to avoid a quick return to elections and more amenable to a broad coalition government, something it previously rejected.
"We need to form a political government, it can have experts or intellectuals in it as long as it is a political government," said Franco Marini, a PD founder and one of the party's candidates who failed to be elected president.
Newspaper reports named deputy PD leader Enrico Letta as one possibility both to lead the party and a government, or former prime minister Giuliano Amato.
"This government should be an improvement on the Monti government, with more politicians inside it so that the parties cannot criticize it when it pleases them like they did with Monti," Buttiglione told Reuters, adding that both Amato and Letta were credible possibilities for the premiership.
Bersani's departure could make way for his arch-rival, the ambitious 38-year-old mayor of Florence, Matteo Renzi, to emerge as the new party leader and future prime ministerial candidate.
"Now the PD has the chance to really change, without any fear, we'll try," Renzi said in a tweet after Napolitano won the vote.
(Reporting by Naomi O'Leary; Editing by Giles Elgood)
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