By Steve Scherer and Massimiliano Di Giorgio
ROME (Reuters) - Italy's 5-Star Movement and League neared a deal on Monday that would bring together two parties with very different election platforms, but which both want to challenge Europe's rigid budget rules and boost spending.
Seeking to end a 10-week political stalemate, the parties met at the weekend to hammer out a policy program, with 5-Star leader Luigi Di Maio and his League counterpart Matteo Salvini aiming to pick a prime minister who would be acceptable to both.
Di Maio said on Sunday they were close to an "historic" agreement, but their choice of prime minister has not yet been announced and confusion remains over who it will be.
A 71-year-old economist and university professor, Giulio Sapelli, said on Monday he had spoken to both leaders and would be willing to do the job so long as former centre-right economy minister Domenico Siniscalco took charge of the economy again.
Sapelli said another candidate for the prime minister's job was also under consideration -- law professor Giuseppe Conte.
But shortly after Sapelli spoke, a 5-Star source denied that he was their pick for the top office.
President Sergio Mattarella, who has the final word on nominating a premier, reminded the parties in a speech on Saturday that he is not obliged to accept their recommendation.
He is scheduled to see both sides later on Monday, the anti-establishment 5-Star at 4:30 p.m. (1430 GMT) and the far-right League at 6 p.m.
If Mattarella is satisfied with their choice, Italy could have a government in place by the end of the week. But should no agreement be reached, new elections are likely.
The two parties -- the largest groups in the legislature who together can muster a majority in both houses -- were adversaries before the March 4 national election, which produced a hung parliament.
Five-Star won 32 percent of the vote and the League 17 percent.
They have been negotiating since Thursday to try to settle on a "contract" of mutually acceptable policy commitments.
Mattarella, normally a low-profile figure, warned over the weekend about the importance of Italy running sound public finances and maintaining its traditional pro-European Union positions.
The economic promises made by both parties during the campaign seem incompatible with Europe's budget rules, though investors -- generally made uneasy by any prospects of fiscal slippage by governments -- seemed little fazed on Monday.
Italian stocks slipped slightly, in line with other European markets, and bonds were little changed.
Five-Star's flagship policy of a universal income for the poor would cost an estimated 17 billion euros ($20 billion) per year. The League's hallmark scheme, a flat tax rate of 15 percent for companies and individuals, is tipped to cut tax revenues by 80 billion euros per year.
Scrapping an unpopular pension reform would cost 15 billion euros, and another 12.5 billion would be needed to head off an automatic hike in sales tax due for next year.