Media magnate and ex-mayor face off in Italian poll

Italians began voting on Sunday in an election that will hand media magnate Silvio Berlusconi or former Rome mayor Walter Veltroni, two very different men with similar policies, the task of trying to cure economic malaise.

Polling booths opened at 8 a.m. (7 a.m. British time) and will close at 3 p.m. on Monday, with a clear indication of the result likely by Monday evening. Many of Italy's 47 million voters are gloomy as they select their 62nd government since World War Two.

The economy, slowing towards stagnation, is the main challenge for the next prime minister. But his ability to carry out reforms may depend on a complex election law that makes it hard to win a clear majority in the upper house of parliament.

Flamboyant centre-right opposition leader Berlusconi, seeking a third term, and his low-key centre-left rival both promise modest tax cuts aimed at spurring consumption. They have also both said Italy needs more police to tackle crime.

Berlusconi, 71, has consistently led opinion polls by 6-9 percentage points but the outcome of the parliamentary election could be close, with up to a third of the 47.3 million electorate expected to chose who to vote for at the last minute.

Veltroni, 52, has presented himself as the candidate for change, copying the "Yes we can" slogan of U.S. presidential hopeful Barack Obama.

But many Italians are likely to wait until they arrive at the polling booth to decide how to vote.

"I wasn't going to vote at first, but my girlfriend kept telling me I should," said Flavio Rossi, a Milan waiter. "My father hasn't voted since 1990. Italy needs a complete makeover and none of them are capable."

COMPLEX SYSTEM

The voting system was put in place by Berlusconi's last government before he narrowly lost a 2006 election to Romano Prodi, who preceded Veltroni as the centre left's leader.

This makes it difficult for one party to win a strong majority in the Senate, the upper house, essential for a government wanting to making unpopular economic reforms.

The election winner may have to broker a deal with smaller parties he has held at arms length during the election campaign - the communist/green Rainbow Left, the centrist Union of Christian Democrats and the hard right La Destra.

The next prime minister will want as strong a coalition as possible to avoid the fate of Prodi's government, which collapsed 20 months into a five-year term.

A "grand coalition" uniting Veltroni and Berlusconi now seems less likely than at the start of the campaign.

Italy's economy is suffering from poor domestic demand and the strong euro making exports more costly. The economic malaise is symbolised by the failure to sell the state's controlling stake in airline Alitalia, a major issue for the new government.

The Treasury recently cut its 2008 forecast for economic growth to 0.6 from 1.5 percent. The International Monetary Fund says it will be half the revised figure.

The endorsement of Hollywood star George Clooney, footballer Francesco Totti and actor and director Roberto Benigni have added some glamour to Veltroni's low-key campaign.