Italian local vote to gauge rising economic worry





By Steve Scherer

ROME, May 20 (Reuters) - Italian voters returned to the polls on Sunday for a second round of local elections that have already shown rising discontent with Prime Minister Mario Monti's government and its tough austerity measures.

The election is the first test of voter sentiment since Monti took office, and signals big changes are to come in Italy's political landscape in next year's national election.

Monti himself is not standing in any of the nearly 120 city-government races being held on Sunday and Monday, but the two main parties in the right-left coalition that support him are.

Former night-club crooner and billionaire media owner Silvio Berlusconi's People of Liberty (PDL) party took a walloping in the first round, while its left-leaning Democratic Party (PD) rival wrested control of dozens of city administrations though its support weakened.

The losses of the established parties have been a boon for the scruffy-haired comic Beppe Grillo, whose Five-Star Movement catapulted from a minor fringe bloc to become the country's third-biggest party after first round.

More than 900 cities voted three weeks ago, and Sunday and Monday elections are for cities where no candidate won more than 50 percent in the first ballot.

The success of Grillo's movement was based on his lambasting of Monti's austerity measures, including 24 billion euros in new taxes this year alone, and his railing against the euro, banks and debt markets, targets of popular anger also in recent Greek and French national votes.

Among the most-watched races is the one in Parma, famous for its savoury parmesan cheese.

The Five-Star Movement candidate Federico Pizzarotti, a newcomer to politics, is taking on the centre-left's seasoned politician Vincenzo Bernazzoli.

Races in the port city of Genoa and Sicily's biggest city Palermo also will be important political test grounds.

"The elections have already sanctioned the end of an era, with the leaders and coalitions of the past relegated to history," Maurizio Pessato, vice chairman of SWG polling company, said in a note.

Turnout at midday was about 10 percent, down nearly 3 percentage points compared with the first round on May 6-7.

An early Sunday morning earthquake that killed at least four in northern Italy, and Saturday's bombing in front of a school in Brindisi that killed a teenage girl may limit turnout, which was already low for Italy three weeks ago, at 67 percent.

RECESSION

The economic backdrop for the vote is dark. Italy's economy slid further into recession in the first three months of this year, the third consecutive quarterly decline in activity and the steepest economic contraction for three years, data published on Tuesday showed.

Almost three-quarters of Italians said they were "very worried" about the economy and do not see improvement over the next year, an ISPO-Intesa Sanpaolo survey published in Corriere della Sera newspaper showed on Sunday.

Italians "have never been so pessimistic and worried about the country's economic and social situation", wrote Renato Mannheimer, the pollster, on the results of the survey.

With Monti's approval rating dropping to 38 percent according to SWG, down from 71 percent shortly after he took over in November after a discredited Berlusconi stepped down, the premier is trying to shift focus to growth from austerity.

Monti got a hand from U.S. President Barack Obama at the Group of Eight leaders summit on Friday and Saturday.

Obama, concerned about the knock-on effects of the euro zone debt crisis on the U.S. economy and his own re-election bid, pushed a more hearty approach to growth instead of a single-minded focus on belt tightening.

Newly elected French President Francois Hollande is also promoting a growth agenda as political upheaval in Greece stokes concerns over instability in Spain and Italy.

The G8 communique endorsed calls to broaden Europe's focus beyond German-backed austerity in the first line, calling it "our imperative" to promote growth and job creation.

Though the election of mayors and city councillors will have no direct impact on Monti's government, the poor results of the parties that back him dim the prospect of making unpopular but deeply needed reforms.

Voting began on Sunday and will close at 3 p.m. on Monday, with preliminary results expected soon after.