* Prosecutor abandons hearings for fear of assassination
* Historic case accuses state officials of collusion
By Sara Rossi and Wladimir Pantaleone
MILAN/PALERMO, Dec 12 (Reuters) - A death threat by a Sicilian mafia boss against the lead prosecutor in a historic mob trial has stirred grim memories of the murders of Italy's top prosecutors two decades ago.
Salvatore "the Beast" Riina, the boss of all Sicilian mafia bosses at least until his 1993 arrest, was captured by hidden microphones and prison cameras threatening Palermo prosecutor Antonino Di Matteo while talking to a fellow inmate on Friday.
"I'll cut him up like a tuna," Riina said of Di Matteo, according to judicial sources in Palermo who have heard the recordings. Bosses in the Sicilian mob, or Cosa Nostra, maintain their status and power even behind bars.
Riina's threat comes 20 years after Palermo saw magistrates Giovanni Falcone and Paolo Borsellino blown up by mafia bombs.
Di Matteo is the lead prosecutor in a case, being held in Milan for security reasons, accusing Italian officials of holding negotiations with the mob at the time of the bombings.
He did not attend the Milan hearings and has been put under "exceptional level 1" protection, the same as that for the president and prime minister.
"Nino Di Matteo's absence in Milan is a terrible sign," said Salvatore Borsellino, brother of the magistrate slain in 1992, because it showed the state could not guarantee his safety.
Borsellino, who attended Thursday's hearing, said the failure of President Giorgio Napolitano and Prime Minister Enrico Letta to publicly express support for Di Matteo after news of the threat was leaked to the media was "very grave".
The case stems from a murky period in which the powerful Cosa Nostra led by Riina, who seized control of the crime group in a 1981-83 mob war that left as many as 1,000 dead, targeted the state.
Di Matteo and other Palermo prosecutors allege that senior politicians and police officials held talks with the mafia after Falcone, his wife and three bodyguards were assassinated by a bomb planted under a road.
The state's willingness to enter talks after Falcone's murder encouraged further bombings, prosecutors say, and prompted the assassination of prosecutor Borsellino because he had learned of and opposed the negotiations.
The Cosa Nostra's aim in the early 1990s "was to acquire political power in Sicily to then extend it nationally", mafia turncoat Giovanni "the people-slayer" Brusca, who detonated the bomb that killed Falcone, said in testimony on Thursday.
Brusca was surrounded by a phalanx of police as he gave his testimony.
Nicola Mancino, interior minister during the period of the alleged negotiations, is being tried for giving false testimony, while another nine defendants, including three former senior paramilitary Carabiniere officers, face charges that they sought to blackmail the state. All deny wrongdoing.
Riina has been convicted of ordering the murders of Falcone and Borsellino and is serving life in a prison not far from the high-security bunker courthouse where the hearings are being held. The 83-year-old boss watched the proceedings on closed-circuit TV.
Di Matteo has been living under protection for at least 15 years, and navigates Palermo with nine bodyguards and three cars. On Sunday he was offered an Italian armoured military vehicle, which he refused.
"I can't move around the city in a tank," he said. (Writing by Steve Scherer; editing by Andrew Roche)