The first round of voting in Italy's presidential elections was inconclusive, Reuters reported at midday on Thursday. Based on the votes counted, it appeared that a two third majority for the presidential front runner, Franco Marini, was impossible.
To win the presidential vote, candidates need to gain a two-third majority out of 1,007 electors from the combined houses of parliament. If that cannot be reached in the first three rounds of voting, a further round can be held in which only a simple majority is required.
Another vote is expected this afternoon and two more votes will be held on Friday should the votes continue to be inconclusive.
Italy's Presidential elections are the biggest indication of whether the country will have to return to the polls later this year, as a failure to agree over the next president could cement the political deadlock further.
On Wednesday, center-left leader Pier Luigi Bersani proposed the former Senate speaker Franco Marini as a presidential candidate. Marini is also backed by the head of the center-right alliance, Silvio Berlusconi, and outgoing Prime Minister Mario Monti, in a show of consensus between the political groups that hasn't been seen during the last few months.
Italian lawmakers begin voting on a replacement for President Giorgio Napolitano, whose mandate expires on May 15, at 8:00 a.m. London time.
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"Marini is the candidate who is best able to attract broad support," Bersani told a meeting of parliamentarians from his Democratic Party (PD) on Wednesday, Reuters reported. "He is linked to labor and social issues and is one of those who have built up the centre-left," Bersani added.
On Tuesday, Monti and Bersani said they wanted a candidate who represented "the maximum possible convergence of opinion among the political forces on the choice of an authoritative candidate who would be able to represent national unity."
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Marini, however, is not without his detractors, with opposition coming from within Bersani's own PD camp from the popular mayor of Florence, Matteo Renzi. Renzi's strong influence on fellow party members could yet help prevent a Marini win. On Wednesday, Renzi told La Stampa newspaper website, "We oppose this choice. Our parliamentarians will not vote for him."
Meanwhile, the anti-establishment Five Star Movement led by comic and politician Beppe Grillo, said it would instead back a well-known Italian investigative journalist in the vote on Thursday.
Fabio Fois, an Italy economist at Barclays, told CNBC that the choice of president was "crucial".
"It's very important to get the PD and PDL [Berlusconi's party] to agree on a common candidate who will be palatable for both the main parties," Fois told CNBC Europe's "Squawk Box" on Thursday.
"If a president is elected, he would probably try to form a grand coalition and there could be a new election in the first or second quarter of 2014. In the meantime, the coalition would make some changes to electoral law and primary budget adjustment, which we think is required."
Fois added that structural reform would be delayed until the new government was in office, after the next election.
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The former prime minister and European Commission President Romano Prodi appeared to be one of the frontrunners for the post earlier this week. But on Tuesday, Berlusconi ruled out voting for him. Other potential candidates include former prime ministers Giuliano Amato and Massimo D'Alema and former European Union Commissioner Emma Bonino. But those candidates have all drawn objections from various political factions.
Simple in Practice
However, getting Italy's disparate political groups to agree over anything has been difficult enough over the last few months since elections in February failed to give any of the major political parties an outright majority.
Since then, the country has remained effectively leaderless as politicians have failed to find common ground and form a coalition government. In the meantime, vital reforms have been on hold until a new administration can be formed.
"Once sworn in, the new President will likely try to revive talks among major parties to form a new government," Emily Nicol, an economist at Daiwa Capital Markets, said in a note on Wednesday.
"But given the current political stalemate, we continue to believe that the new President will eventually be forced to dissolve the parliament, in which case elections could be held in mid-July at the earliest (given a required 45-day period between dissolution and elections)," she added.
Bill Blain, senior fixed income strategist at Mint Partners, told CNBC that Italy could be in an "extraordinary" situation if the elections do not go to plan.
"When the economy is as stalled as Italy's, and there is no government in place, how do they continue the reform process which has also stalled? If we get another [Europe-wide] crisis... that is when we will really see the problems hit Italy. It could become quite extraordinary if there is no one to continue the reforms Monti had barely started," Blain said.