* Final tests loom for centre-right leader after climbdown
* Committee expected to open way for full Senate vote
* Berlusconi defiant as hearing nears
By James Mackenzie
ROME, Oct 4 (Reuters) - Italian senators met on Friday to decide whether to move towards expelling Silvio Berlusconi from parliament over his conviction for tax fraud, opening the way for a final decision later this month which could seal his political fate.
Berlusconi, who has dominated Italian politics for the past two decades, did not attend the hearing but denounced the procedure as a manoeuvre by his political enemies to remove him.
"There is no possibility of any defence and there is no reason to appear before a body which has already announced what decision it is going to take through the press," he said in a statement issued through his lawyers.
The cross-party committee of 23 senators that met on Friday is dominated by lawmakers from the centre-left Democratic Party (PD) and opposition parties including the anti-establishment 5-Star Movement, who have said they will vote to strip Berlusconi of his seat in the upper house.
The judgment, expected later on Friday, would have to be confirmed around two weeks later by a full vote of the Senate, which is also dominated by Berlusconi adversaries.
After a public hearing in the morning, the committee met in a closed-door session and is expected to reach a decision in the afternoon, although it could delay a judgment until the weekend.
The Senate proceedings cap a disastrous week for the 77-year-old billionaire, who was forced into a humiliating climbdown on Wednesday by a party revolt which made him back centre-left Prime Minister Enrico Letta in parliament.
After pulling his ministers from the coalition government at the weekend and calling for new elections, Berlusconi had to reverse his decision to bring down the government and, instead, backed Letta in a confidence vote after dissenters in his own party threatened to tear the centre right apart.
The revolt left Berlusconi's People of Freedom (PDL) divided into two blocs, with 42-year-old party secretary Angelino Alfano heading a group of moderates while a hardcore of loyalists remain with Berlusconi, although a formal split has not yet been confirmed.
Even if Berlusconi is expelled from the Senate he could still lead the centre right, or the part of it that remains loyal to him, from outside parliament.
However, his position would be weaker and he would be robbed of the protection from arrest which parliamentarians enjoy, which could be important as he faces many other legal cases.
Having recovered from their alarm at the prospect of a government collapse, financial markets reacted positively with yields on Italian 10 year bonds falling to 4.3 percent, the same as before the crisis erupted last week.
Berlusconi's political future has been under threat since early August when Italy's top court rejected a final appeal and found him guilty of a massive tax fraud scheme at his Mediaset television empire.
It sentenced him to four years in prison, commuted to one year under house arrest or in community service, making him ineligible for parliament under a law passed last year.
Berlusconi loyalists insist this law should not apply in his case because the offences occurred before it was passed.