* Napolitano says law must take its course
* President warns against endangering fragile government
* Marina Berlusconi says she will not take over from father
President Giorgio Napolitano on Tuesday ruled out any reversal of a tax fraud conviction against Silvio Berlusconi and issued a stern warning to his party against trying to bring down the government over the issue.
Napolitano's statement that the law must take its course dashed hopes in Berlusconi's People of Freedom (PDL) party that the head of state would find a way to allow the former prime minister to continue his leadership of the centre-right without restriction despite a jail sentence.
The party says that curtailing Berlusconi's political activity would rob the 10 million people who voted for him in February's election of their democratic choice. Several of its leading members had pressed Napolitano to find a way out.
"Any definitive sentence, and the consequent obligation of applying it, cannot but be taken into account," Napolitano said in a statement, warning against any "fatal" crisis in Enrico Letta's fragile left-right coalition government at a time when Italy is stuck in its worst postwar recession.
Earlier, Berlusconi's oldest daughter Marina, 47, who heads his 6.6 billion euro business empire, flatly dismissed speculation that she could become the PDL figurehead to run the party while her father was out of circulation.
The supreme court this month confirmed a four-year jail sentence - commuted to one year - on Berlusconi for a giant tax fraud at his Mediaset broadcasting empire.
Napolitano noted that Berlusconi would not be expected to go to jail. Because of his age, the billionaire businessman is likely to serve the sentence under house arrest or doing community service.
NO REQUEST RECEIVED
The president did not entirely rule out pardoning the 76-year-old media mogul but said he could do so only in very restricted circumstances, and that he had not received the formal request from Berlusconi that was necessary before he could even consider it.
Napolitano forced the PDL and Letta's centre-left Democratic Party (PD) into an uneasy coalition government in April to end a two-month hiatus after the inconclusive election. He has repeatedly warned, as has Letta, that the country cannot afford another vote now.
Such a renewed bout of instability in the euro zone's third economy could send tremors throughout the bloc, although factions in both the PDL and PD are believed to be tempted by another election.
PDL hawks and Berlusconi himself have warned that the government could fall in the autumn if no way is found to solve his legal dilemma or force through a repeal of a hated housing tax on which there is deep disagreement with the centre-left.
"It is understandable that there would emerge, especially in the PDL, anxiety and worry over the definitive conviction of a person who has led the government ... and who remains the undisputed leader of an undeniably important political group," the president said.
But he urged the PDL to prioritise the interests of the country while deciding how to deal with the conviction of its leader.
Initial reaction from the PDL was muted. Its floor leader in the Chamber of Deputies, Fabrizio Cicchitto, said Napolitano's statement left open some options for the future.
"We must greet this stance of the president with a sense of responsibility and a constructive spirit," he said.