Italy PM quashes resignation talk

Head to head: Mr Berlusconi (r) and opposition leader Romano Prodi

Italian premier Silvio Berlusconi has said he intends to run for re-election in 2006, quashing rumours that he was planning to stand down.

His party suffered a series of defeats in local elections in April, prompting speculation he might quit.

Mr Berlusconi was forced to resign briefly and reshuffle his cabinet, to salvage his coalition after the polls.

But after meeting coalition members he said his political partners considered him "a resource and not a problem".

Bruising polls

He brushed aside media suggestions that someone else would be better placed to lead the coalition into the election, expected in May next year.

"The candidate for the centre-right in 2006 must be Silvio Berlusconi," the prime minister said following the meeting.

Mr Berlusconi had said he would step aside if a better candidate came forward.

A flagging economy has also dented the Italian leader's standing in the opinion polls.

Italy has cut its growth forecast for this year and raised its debt and deficit forecasts.

In the election the governing coalition will face a centre-left alliance whose leader is likely to be Romano Prodi, a former president of the European Commission.