By Giselda Vagnoni and Gavin Jones
ROME (Reuters) - Italy's anti-establishment 5-Star Movement supports the European Union and wants significant law-making powers transferred from governments to the European Parliament, its leader Luigi Di Maio told Reuters.
5-Star, which leads opinion polls ahead of an election to be held by May, is trying to reassure Italy's partners and financial markets that it can be trusted in government, and distance itself from its previously euroskeptic positions.
"We are pro-EU and we intend to contribute to creating the future of Europe," the 31-year-old lower house deputy, who was elected in September as 5-Star's leader and prime minister candidate, said in an interview.
He said if 5-Star wins power it will negotiate with Italy's partners to try to set up EU-wide welfare policies to tackle growing poverty and inequality in many countries in the bloc, including Italy, the EU's fourth largest economy.
"If it reforms, the EU can be a solution to many of our problems," Di Maio said, calling for more law-making powers for the European Parliament as the only directly elected EU body.
He said 5-Star's stance on Europe and the euro had shifted since 2014, when it lobbied for a referendum to take Italy out of the common currency zone and joined the euroskeptic group of Britain's United Kingdom Independence Party (UKIP) in the European Parliament.
He said the defeat of traditional parties in France and the difficulties in forming stable, majority governments in Germany, Spain and Portugal meant there is no longer the wide EU support for austerity policies that 5-Star has opposed.
It has not totally withdrawn the idea of a referendum on the euro, but it now calls it "a last resort" to be employed only if Italy wins no concessions on EU governance from its partners.
"We set out with strong opposition to the euro because back then there was too much difference between our positions and the monolithic, pro-austerity position promoted by Germany which dominated in Europe," he said. "But now things have changed."
5-Star tried this year to leave the UKIP group in the European Parliament to join the pro-Europe Alliance of Liberals and Democrats for Europe (ALDE), but the switch fell through due to resistance from some ALDE members.
Di Maio said that after the next European elections in 2019 5-Star would avoid linking up with any "extremist, populist, xenophobic or old-style leftist movements."
Domestically, 5-Star bases its support on an anti-corruption drive and policies that bridge the traditional left-right divide such as clean energy, tax cuts for small businesses and more public investment in infrastructure and education.
As part of a charm offensive as the election nears, last month Di Maio visited Washington to burnish 5-Star's image with the U.S. administration, and party officials met in Rome with representatives of large international banks and hedge funds.
He spoke to Reuters on the sidelines of a conference organised by Italian media website EUnews.
5-Star, which shuns alliances with Italy's traditional parties, leads opinion polls with around 28 percent of the vote, some 3 points ahead of the ruling Democratic Party, but it seems sure to fall well short of a parliamentary majority.
Di Maio said 5-Star's plan was to form a minority government and seek support from other parties for its policies on a case-by-case basis.
(Editing by Mark Heinrich)