* PM Renzi resigned after drubbing in referendum
* President faces his first government collapse
* Talks end Saturday, future shape of govt to be decided
By Steve Scherer and Francesca Piscioneri
ROME, Dec 8 Italy's president began talks with
political leaders on Thursday to seek a way out of the political
crisis caused by the resignation of Prime Minister Matteo Renzi.
Sergio Mattarella, a 75-year-old former politician and
constitutional court judge, must decide if someone can lead
Italy to elections scheduled for 2018, or whether an interim
government should serve until a snap vote can be held in spring.
Mattarella, a former Christian Democrat with a less
interventionist style than his predecessor Giorgio Napolitano,
begins talks with institutional leaders at 6 p.m. (1700 GMT) at
the his Quirinal Palace.
Meetings will expand to parliamentary parties on Friday and
wrap up on Saturday evening.
The process is a familiar one in Italy, which has a
notorious history of government collapses, but it is the first
since the Sicilian Mattarella took office last year after a
career in politics which began after the mafia assassinated his
politician brother in 1980.
Mattarella could wait until Monday to make his decision
known, a source close to the president said. Renzi has ruled out
-- for the moment -- staying on as a caretaker, a parliamentary
Most parties, including Renzi's Democratic Party (PD) which
holds the most seats in parliament, appear to favour an early
vote, which would add Italy to a list of major European
countries -- including France, Germany and the Netherlands --
facing a national ballot in 2017.
So far markets have taken Italy's situation in stride. Even
Banca Monte dei Paschi di Siena, which looks likely to
require government intervention to survive, saw its shares rise
more than 6 percent on Thursday after it asked the European
Central Bank for a three-week extension to its rescue plan.
On Tuesday, Mattarella unexpectedly dictated two conditions
that delay any vote until spring: the
Constitutional Court must rule on the lower house's current
voting law, a decision not expected before a Jan. 24.
Subsequently parliament must draft new election rules for
both houses, Mattarella said. Considering 45 days for
campaigning are set aside by law, it would be difficult to hold
an election before April.
The consultations will allow Mattarella to test
parliamentary waters, but Renzi's majority - and his input as
leader of the PD - are key to what happens next.
On Wednesday, Renzi said the PD would only participate in a
government intended to last until 2018 if it was backed by all
the main forces in parliament, a prospect most of them have
already ruled out. Otherwise, early elections should be held as
soon as possible, he said.
Mattarella is widely expected to ask a member of Renzi's
cabinet, or a politician from his Democratic Party, to try to
form a new government. But he might also seek parliamentary
backing for a leader of his own choosing.
(Editing by Robin Pomeroy)