By Alistair Scrutton

NEW DELHI, July 4 (Reuters) - The leftist parties that prop up India's troubled government will discuss on Friday when they could withdraw support from the ruling coalition over a civilian nuclear deal with the United States that they vehemently oppose.

Scrambling to avoid snap elections if the left withdraws, Prime Minister Manmohan Singh is trying to get support from a north Indian regional party to secure a parliamentary majority for his Congress party-led ruling coalition.

Some leading communist party officials say they could announce their withdrawal if Singh formally seeks approval for the deal from the International Atomic Energy Agency (IAEA), a key step needed to make it operational.

"We will withdraw if they go to the IAEA, it's our decision," Nilotpal Basu, a leader of India's largest communist party, the Communist Party of India (Marxist), or CPI-M, told Reuters late on Thursday.

Other leaders have hinted they could withdraw if Singh heads to a G8 summit in Japan next week, where he will likely meet U.S. President George W. Bush -- the man who shook hands with Singh over the accord at the White House in 2005.

Either way, it looks increasingly likely that Singh will press ahead with the landmark accord, moving India's trade and diplomatic relations closer to the West.

Frustrated after four years of stymied reforms due to leftist opposition, Singh now seems to want to secure his legacy before the end of his term, even if some experts say time has run out for U.S. Congress to pass the deal before Bush leaves office.

The result could lead to months of electioneering and political bickering just as investors are seeking tough decisions on a trillion-dollar economy that faces inflation at a 13-year high, rising interest rates and signs of an economic slowdown.

The pact, which would give India access to U.S. nuclear fuel and technology, is potentially worth billions of dollars to U.S. and European nuclear supplier companies and would give India more energy alternatives to drive its development.

But many Indian politicians worry the deal will compromise India's sovereignty, and the left says it makes India a U.S. pawn.

CRUCIAL SUPPORT

The prime minister now appears closer to winning support from the Samajwadi Party (SP), a key regional party from Uttar Pradesh state that has a history of pragmatic alliances with national parties.

On Thursday, SP party leaders met former President A.P.J. Abdul Kalam, seen as the father of India's missile program and a highly respected proponent of the deal. SP leaders hinted that Kalam's support could sway them.

"We have met Mr Kalam and he has advised us, and according to him, the deal is in the interest of the nation," SP leader Mulayam Singh Yadav said on Thursday. "He has said it is beneficial and now it is up to us to decide."

The ruling coalition already faces other challenges, including a strike by truckers to protest against rising fuel prices. The strike threatens to push record inflation higher and choke off supplies of some basic goods.

The political uncertainty has hit markets this week.

Stocks fell more than 4.2 percent on Thursday, pushed down not only by worries over the government's future but also by record oil prices and inflation.

In Washington, White House spokeswoman Dana Perino told reporters on Thursday that the two leaders would discuss the deal during their meeting and that the United States remained committed to it.

"We respect the democratic process that's currently working its way in New Delhi, and look forward to working with India when it is ready to move forward," she said.

The Samajwadi has 39 seats in parliament, compared with 59 for the communist parties. The Congress-led ruling coalition needs the support of 44 lawmakers to reach a majority. (Editing by Jonathan Allen and Valerie Lee) (For the latest Reuters news on India see: http://in.reuters.com, for blogs see http://blogs.reuters.com/in)

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