Hungary's Mesterhazy to lead leftist poll challenge

But opinion polls suggest Mesterhazy will struggle to oust Orban, who has used his large majority over the past four years to enact sometimes controversial measures that have upset foreign investors, the European Union and human rights groups.

"The (Socialist) Congress will finalise the new situation in which I will be nominated to run for prime minister," Mesterhazy told Reuters, referring to a party meeting set for late January.

"The task is great and I accept the challenge," said the 39-year-old trained economist and motor cycling enthusiast.

Hungary's President Janos Ader must announce in the coming weeks an election date in April or May. The earliest possible date it can be held is April 6.

Orban's centre-right Fidesz party has extended its lead in opinion polls after a series of voter-pleasing measures, including utility price cuts, higher salaries for teachers and more generous child care benefits.

A poll late last month gave Fidesz 31 percent support against 15 percent for Mesterhazy's Socialists (MSZP), but political analysts say about a third of voters are still undecided about which party to back. ]ID:nL6N0K919R]

Orban's government has rewritten swathes of Hungarian law, including the constitution in a way that critics say cements its hold on power while using a hefty bank levy and special taxes on mostly foreign-owned companies to cut Hungary's budget deficit.

ECONOMIC MISMANAGEMENT

In power since 2010, Orban says his measures have saved Hungary from a Greek-style collapse after years of economic mismanagement by previous Socialist governments.

Mesterhazy's party wants to scrap Hungary's flat tax, which it says favours the rich, and to boost bank lending.

Mesterhazy and Gordon Bajnai, a former prime minister and leader of a new centre-left party Egyutt (Together) 2014, agreed on Wednesday to form a joint list of candidates and to invite another former Socialist premier, Ferenc Gyurcsany, and his new party Democratic Coalition (DK) to join them.

Gyurcsany gained notoriety in 2006, when he admitted that the Socialists had lied "day and night" to secure re-election, sparking violent street protests. He was replaced by Bajnai in 2009, then left the Socialists in 2011 to form DK.

Gyurcsany declined to comment on Wednesday but earlier this week told MTI news agency that his party was ready for talks.

Egyutt 2014 and DK each had four percent in the latest opinion poll, below the 5 percent threshold to enter parliament.

The moves towards greater cooperation among the centre-left parties contrast sharply with the disunity of recent years.

But analyst Agoston Mraz, director of the right-leaning Nezopont Institute, said the leftists appeared to be focusing more on core supporters rather than undecided voters.

"This (rapprochement) is a demonstration of power targeting core voters but alienates those sceptical of the left," he said. "It is unlikely to change their election chances." (Editing by Gareth Jones)