* President Giorgio Napolitano's term ends on May 15
* Berlusconi to hold Rome rally against judges on Saturday
By Roberto Landucci
ROME, March 18 (Reuters) - Former Italian Prime Minister Silvio Berlusconi promised a wave of protests if a centre-left candidate was elected to succeed President Giorgio Napolitano, as the stalemate after last month's deadlocked elections deepened on Monday.
Electing the new head of state is the next big task for parliament, now split into three rival blocs after the election which left the centre-left in control of the lower house but short of a majority in the Senate and unable to govern.
The stalemate has caused mounting alarm across Europe and fears of a return to the financial market chaos which forced Berlusconi from power in 2011, with the Cyprus bank crisis underlining the fragility of confidence in the euro zone.
Napolitano is due to begin consultations with party leaders on Wednesday to see if a government can be formed but the parties have shown no sign of overcoming their differences, raising the likelihood of a return to the polls within months.
Parliament will begin the process of electing the president in mid-April, a month before Napolitano's term ends on May 15. With no overall majority in the two houses, the centre-left would have to reach an agreement with either caretaker Prime Minister Mario Monti's centrist bloc or the anti-establishment 5-Star Movement of comic and blogger Beppe Grillo.
Berlusconi said he thought the centre-left would ensure its candidate became the next head of state.
"I think they will pick the next president of the Republic and in that case we will give battle in parliament and in the town squares," he told supporters in parliament, according to a participant at the meeting.
Berlusconi's People of Freedom (PDL) party is already planning a rally in Rome on Saturday to protest against what it says is judicial persecution of the 76-year-old billionaire, who is appealing against a conviction for tax fraud and faces a separate trial on charges of paying for sex with a minor.
PDL secretary Angelino Alfano proposed the party's support to centre-left leader Pier Luigi Bersani on Sunday in exchange for an agreement giving the presidency to the centre-right.
The offer was promptly rebuffed as "indecent" by Bersani, who received some encouragement at the weekend when parliament elected two centre-left candidates as speakers of the lower house and Senate.
The election of the speakers depended on support from a handful of senators from the 5-Star Movement who defied party orders not to vote with the centre-left, prompting the fiery Grillo to threaten to expel them from the movement.
On Monday, Grillo, who has repeatedly ruled out any deal with the mainstream parties, appeared to relent slightly, saying the rebels appeared to have voted "in good faith" for the centre-left Senate candidate, former anti-mafia judge Pietro Grasso.
However he said they had fallen into a "trap" intended to divide the movement and he said all 5-Star parliamentarians had to stick to voting instructions, despite a furious online argument among supporters.