Madagascar president says could pardon ousted leader

* Presidential pardon possible for former leader

* Fresh poll could happen before end of year

By Alain Iloniaina

ANTANANARIVO, July 11 (Reuters) - Madagascar's army-backed president has said he could pardon his predecessor Marc Ravalomanana in a move that could block the exiled former leader from contesting future elections.

Madagascar has been shaken by political instability since Andry Rajoelina toppled Ravalomanana in March, branding him corrupt and dictatorial. The power grab alarmed foreign investors, spooked tourists and stunted economic growth.

"It is within my powers to issue a pardon, but I haven't thought about it much yet," he said late on Friday in an interview with selected journalists.

A Madagascar court last month sentenced Ravalomanana in absentia to four years in jail for abuse of office in the purchase of a $60 million presidential jet.

The former president called the charges unfounded.