By Giuseppe Fonte and Massimiliano Di Giorgio
ROME (Reuters) - Italy's anti-establishment political leaders Matteo Salvini and Luigi Di Maio on Thursday were poised on Thursday to resurrect their proposed coalition government, averting the prospect of a new snap election which had rattled global markets.
Two sources from Di Maio's 5-Star Movement said an agreement was near. Rome economics professor Giovanni Tria was being considered for the economy ministry job, replacing a sceptic of the euro single currency who had been vetoed by the president, a move that plunged Italy into political crisis earlier this week.
Law professor Giuseppe Conte would remain the party leaders' choice for prime minister, the 5-Star sources said.
"These are the last hours of work to put together the government, and we're doing all we can to get it done," Salvini said on Facebook (NASDAQ:FB).
The two party leaders have been meeting for several hours in parliamentary offices in central Rome.
President Sergio Mattarella torpedoed an initial attempt by the League and 5-Star to form a coalition, rejecting their candidate for the economy portfolio, 81-year-old economist Paolo Savona, who has spoken out against the euro single currency.
Global financial markets have been recovering over the past two days after tumbling earlier this week over the prospect of a new Italian election dominated by debate over Italy's future in the euro zone.
MARKETS RECOVER
After the coalition attempt failed, Mattarella named former International Monetary Fund official Carlo Cottarelli to form a stop-gap government of experts to lead the country to elections. But Cottarelli has so far not presented a cabinet and has received no support from any of the major parties.
Conte, the candidate chosen by Di Maio and Salvini to be prime minister, gave up his mandate on Sunday, but the president could tap him again if Cottarelli steps aside.
Di Maio, whose 5-Star emerged from the inconclusive March 4 elections as the largest single party, urged Salvini to drop his insistence on Savona for the economy portfolio and agree to give him another post.
Most opinion polls show Salvini's League would see huge gains in any early elections while the 5-Star would remain steady or see some gains.
Italian stocks were trading higher and its borrowing costs edged lower as signs emerged of a compromise to avoid the snap election. Italy's 2-year government bond yield, which has been the focus of a recent selloff, was down as much as 95 basis points at 1.40 percent (IT2YT=RR).
The latest development came amid a general calming of financial markets after Tuesday's rout, when investor concerns prompted the biggest one-day rise since 1992 in Italian two-year bond yields and dented the euro's exchange rate.
"I have lost my patience. I have had enough, that is the truth," said exasperated Rome resident Teresa Gallo as she was walking to a market for her regular morning shopping.
Two polls released on Wednesday night showed that around two thirds of Italians want the country to remain part of the euro while around a quarter would choose to drop the common currency. [L5N1T214H]
Lupo Rattazzi, a prominent Italian businessman, ran a full-page advertisement in several national newspapers addressed to Salvini and Di Maio, warning the electorate of the dire consequences of leaving the euro.