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Italian leftist leader Pier Luigi Bersani lost his bid to form a new government on Thursday after failing to break a political deadlock, leaving the eurozone's third largest economy in limbo.
The ex-Communist had been given a mandate last week by Italy's president to try and muster enough support to govern after inconclusive elections that left the country vulnerable on financial markets.
After six days of intense and often bitter consultations with rival parties, Bersani reported to President Giorgio Napolitano that he had not been able to gather the backing needed to rule.
"My work in these days has not led to a positive result," Bersani said after talks with Napolitano.
The Democratic Party (PD) said their leader had not given up on forming a government.
"Bersani's mandate continues, it is still operational," a PD spokesman told AFP.
But observers said Napolitano could now move to choose a different figure to lead Italy.
Napolitano is set to hold a new round of consultations with the main parties on Friday, which are not expected to last longer than a day.
Bersani's inability to muster support returns Italy to square one, after elections in February saw the centre-left scrape a victory in the lower house but fail to win a majority in the upper house.
Napolitano has said he is keen to avoid an immediate return to the polls.
He could hand over the reins to a cross-party political coalition or a technocrat government similar to the one headed up by outgoing Prime Minister Mario Monti -- who was brought in to rescue Italy from the debt crisis in 2011.
Bersani could still be asked to head up a coalition, but observers say he may have blown his chances.
"There will not be a Bersani government," said Stefano Folli, political analyst and columnist for Italy's Il Sole 24 Ore business daily.
In an unusual move, the anti-establishment 5-Star Movement (M5S) founded by former comedian Beppe Grillo appealed to Napolitano in a video.
"We are ready, Mr. President, ready to govern. We want a civilised country no longer in the hands of buffoons and cheats. Is that too much to ask? Give us a go," said the movement, which has won vast numbers of supporters on the back of its campaign against party privileges and corruption.
Folli said Napolitano was likely to pick an authoritative, non-political leader who could win cross-party support with the presidency's backing.
He is likely to choose "a more institutional than political figure, a man or woman who belongs to the institutional world but not explicitly to the parties," he said.
The political turmoil in Italy has been watched closely by Europe and the markets, which fear instability in the debt-laden country could spark tumult in the eurozone, particularly after a bailout dispute in Cyprus reignited fears over the euro area debt crisis.
Financial observers warn that the longer the country goes without a government, the deeper the already troubled economy may slump -- bad news for ordinary Italians, who have already been hit hard by the worst recession in Italy for 20 years.
Youth unemployment was at almost 39 percent in January, while the government said last week that the economy looks to shrink by 1.3 percent this year, compared with the 0.2 percent shrinkage previously forecast.
The 61-year-old Bersani had tried to persuade other parties to support him -- proposing a limited programme of urgent reforms in exchange for their backing -- but on Thursday blamed his difficulties on "unacceptable demands" made by rivals.
The leftist leader had repeatedly tried -- and failed -- to woo the 5-Star Movement.
He had been unwilling from the start to work with former premier Silvio Berlusconi and the right, and turned down conditional offers of support which hinged on having a say in key appointments.
Berlusconi's People of Freedom (PDL) party came a close second in the February elections and had said a coalition in government would only be fair to Italian voters.
Bersani's refusal to countenance a left-right coalition had also angered some within his party, who thought that allying with their rivals would be better than returning to the ballot box.