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Former Italian Prime Minister Matteo Renzi (R) and Prime Minister Paolo Gentiloni attend a meeting of Democratic Party (PD) in Rome, Italy February 19, 2017. REUTERS/Remo Casilli

(reuters_tickers)

By Crispian Balmer

ROME (Reuters) - Former Italian prime minister Matteo Renzi resigned as head of the ruling Democratic Party (PD) on Sunday, opening the way for a leadership fight in which he will take on rivals threatening to split the centre-left.

Battling for his political life, Renzi made clear he would seek re-election and warned that the PD's internal feuding was proving a gift to its main opponent in parliament, the anti-establishment 5-Star Movement.

A decade after its foundation, the PD is on the cusp of a schism that risks bringing yet more political instability to the euro zone's third-largest economy, which has been mauled by years of recession, high unemployment and towering debt.

PD dissidents, including former leader Pierluigi Bersani, say that the party has shifted too far from its leftist roots. Renzi's supporters say they are driven by personal animosity and are looking to expand their influence in a period of flux.

"The only word worse than 'schism' is the word 'blackmail' ... To ask me to leave is not democratic," Renzi told a party assembly in a smart Rome hotel, confirming he would stand again for the PD leadership that he first won in 2013.

Renzi quit as prime minister in December after losing a referendum on constitutional reform but is eager to return to power and is pushing for national elections to be held this year rather than early 2018 as scheduled.

This has angered the PD dissenters, who argue that more time is needed to work out the party's problems and to develop a manifesto that promotes welfare spending and tackles inequality.

One of Renzi's loudest critics struck an unexpectedly conciliatory note at the end of Sunday's impassioned debate, suggesting that the internal crisis could be resolved.

"We are feeling great pain at this moment. A lot of comrades are coming up to me, taking my hand and saying it is important to stick together. This is within reach," said Michele Emiliano, head of the southern Puglia region.

Renzi did not say when the leadership ballot would be held, but allies say he is keen to hold it before local elections in June, fearing that defeat for the PD then could sink his chances.

Recent opinion polls have put the PD neck and neck with the 5-Star Movement, founded by comedian Beppe Grillo, which wants a referendum on Italy's euro membership.

"Oh Beppe, what a fine present we are offering you by only talking about ourselves," Renzi said.

If the dissidents do form a new party, polls say they could win more than 5 percent of the vote. With the next election likely to be held under a proportional representation system, such a result could give them more power in the next parliament than if they remain in a Renzi-dominated PD.

Standing in the street outside the party meeting, a few PD supporters came to urge their leaders to stick together.

"It is vital that we remain united," said Rome architect Emma Cavallucci, holding the hand of her toddler daughter.

"Our leaders only seem to be talking to each other, not to the world outside. Don't they realise the damage they are doing us?"

(Editing by David Stamp and David Goodman)

Reuters