's PD says "doing our best" to form new government with old rivals

MILAN, Sept 1 (Reuters) - The leader of 's Democratic Party (PD) said on Sunday his team was working hard to form a new coalition government with once bitter adversaries from the 5-Star Movement, with a common agenda and a deal over cabinet posts still being hammered out.

's president gave Prime Minister Giuseppe Conte a mandate on Thursday to try to form a new coalition in the wake of Matteo Salvini's decision to pull his right-wing League from its 14-month-old alliance with 5-Star to seek early elections.

Stung by what it saw as betrayal and keen to avoid a return to the ballot box, the populist 5-Star has agreed to make an attempt to govern with centre-left PD, which is in the process of rebuilding after a string of election defeats.

The two sides have been locked in talks to try to work out how to run together. If no agreement is sealed in the coming week, President Sergio Mattarella is expected to dissolve parliament and set a date for a new vote.

But despite the differences over policy and ministerial roles, senior figures from both sides have been speaking in support of a coalition during the weekend as the talks have continued.

"I know it is difficult, but we're doing our best to give this country a new government," PD leader Nicola Zingaretti said in a video post on Twitter.

He said on Friday after talks with Conte that 's next government must cut income taxes to boost consumption, relaunch investment and focus on health and education.

Former prime minister and former PD leader Matteo Renzi, to whom many party lawmakers owe their allegiance, was quoted in Il Sole business daily as saying: "We do politics thinking of a common good. needs a government that averts a planned VAT tax increase and pulls the country out of the isolation in Europe caused by Salvini."

Beppe Grillo, the influential founder of 5-Star, came out in favour of a deal on Saturday, calling on the PD to seize the "unique" chance to form a coalition.

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"Another chance like this one will not come again," the comedian said in a video posted on his blog. "Let's try to dream, to have a vision."

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5-Star leader Luigi Di Maio has also made a string of policy demands for a new government - including the confirmation of a decree clamping down on migrant sea rescues - setting an uncompromising tone for the negotiations.

The PD has proposed scrapping the deputy prime minister's position, a job that both it and 5-Star wanted.

Salvini's League remains the most popular party, despite toppling the government. A poll published on Saturday by Corriere della Sera daily newspaper showed support for the League fell back to 31.8% from a mid-July record high of 35.9%.

Five-Star rose almost 7 percentage points from mid-July to 24.2% according to the same poll, while PD rose only marginally to 22.3%. (Reporting by Giulio Piovaccari; Editing by Alison Williams)

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