By Giuseppe Fonte
ROME (Reuters) - Italian Prime Minister Mario Monti on Thursday faced a revolt by Silvio Berlusconi's PDL party, which ratcheted up tension ahead of an election early next year by walking out of a Senate confidence vote.
The walkout by the center-right People of Freedom (PDL) party was a symbolic gesture which did not directly threaten the survival of Monti's technocrat government. But it underlined the deep uncertainty in Italian politics ahead of an election expected early next year.
The center-left Democratic Party (PD) said that a repeat walkout by the main center-right party in another confidence vote, in the lower house, later on Thursday would indicate Monti did not have a parliamentary majority.
In that case, it said, President Giorgio Napolitano should call an election ahead of the expected date in March.
"We have to understand if it was an abstention on a single vote or a broader political abstention," PD leader Pier Luigi Bersani told reporters before a meeting with the heads of all the parliamentary parties after the Senate walkout.
In an increasingly fevered pre-election atmosphere, Berlusconi dropped a strong hint late on Wednesday that he could go back on previous statements and run for a fifth term as prime minister in the election.
In a television interview early on Thursday, Industry Minister Corrado Passera expressed strong reservations about a return by the 76-year-old billionaire, who left office in a cloud of scandal at the height of the eurozone financial crisis last year.
"Anything which can make the rest of the world or our partners imagine that we are turning back is not a good thing for Italy," he told state broadcaster RAI.
In reaction, the PDL senators chose limited symbolic action instead of abstaining or voting against, which would have brought down Monti's year-old government.
The government easily won the vote by 127 to 17 votes with 23 abstentions but the dispute had an impact on financial markets, which have been very sensitive to signs of renewed turmoil in the eurozone's third economy after Monti's term ends.
Italian shares turned negative and government bond yields rose amid market rumors that Monti could resign.
The premium investors demand to hold Italian 10 year BTP bonds rather than lower risk German Bunds widened to 324 basis points, having fallen below 300 points earlier in the week.
The stand-off adds to the deep confusion surrounding next year's vote.
PDL Senate leader Maurizio Gasparri said the party had always acted responsibly but left it unclear whether it would repeat the walkout in the Lower House vote later.
Monti, widely credited with restoring Italy's international credibility since he replaced Berlusconi last year, relies on the support of both the PDL and the PD in parliament, but the alliance has frequently been fractious.
In his statement on Wednesday, Berlusconi launched a stinging attack on Monti's government, which he said had dragged Italy into an "endless recessive spiral" with its austerity policies.
His attacks were rejected by Passera, who said that most of Italy's deep economic problems were the result of a decade of poor management by Italian governments.
Berlusconi, who was in power for most of the past 10 years, has changed his mind several times over whether to run next year but has shown increasing signs of wanting to return to the political front line.
He faces deep divisions within the PDL, which is lagging in opinion polls and split between loyalists opposed to Monti and other factions, including many who want to continue backing the government's reform agenda.
Berlusconi's indecision has further undermined the party he founded, whose support now is less than half the level when it won a landslide election victory in 2008.
(Writing by James Mackenzie and Barry Moody)
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