(Adds meeting with former president, quotes)

By Krittivas Mukherjee

NEW DELHI, July 3 (Reuters) - A regional party that could hold the balance of power in India said on Thursday it had to clear up doubts before supporting a nuclear deal with the United States, but hinted it may give crucial backing to the embattled government.

The ruling coalition is wooing the Samajwadi Party (SP) amid signs the communist parties that back the government in parliament will withdraw their support over the civilian nuclear deal. Many Indian politicians worry the deal will compromise India's sovereignty. The left says it makes India a U.S. pawn.

"We need to clear all doubts on the nuclear deal," Amar Singh, Samajwadi Party general secretary, told reporters.

If Prime Minister Manmohan Singh fails to secure Samajwadi support and the left ends its support, his government will likely face a snap election this year.

The ruling coalition already faces other challenges, including an indefinite 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 in the sputtering trillion-dollar economy.

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.

It is also seen as a landmark accord moving India's trade and diplomatic relations closer to the West.

Hours after the SP's Singh's statement, 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 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," Mulayam Singh Yadav said. "He has said it is beneficial and now it is up to us to decide."

The statement came after a meeting of a coalition of smaller parties, including SP, to decide whether to support the deal.

Party officials from this coalition, known as the United National Progressive Alliance, said no decision on the nuclear deal would be made before Sunday.

YEARS OF FRUSTRATION

Frustrated after four years of stymied reforms due to leftist opposition, Prime Minister Singh wants to move ahead with the nuclear agreement and secure his legacy before the scheduled end of his term in May 2009.

The political uncertainty has hit markets this week. Stocks fell more than 4.5 percent by late trading Thursday, pushed down not only by worries over the government's future but also record oil prices and inflation.

Despite a delay, many political analysts say some sort of government accord was likely with the SP, which has a history of pragmatic alliances with major parties.

"They might not openly say that the deal is good, but they are preparing the ground," said Brahma Chellaney, an analyst at the Center for Policy Research.

But all eyes are on India's four communist parties, which meet Friday.

The Communist Party of India (CPI), an ally of the ruling coalition and India's second-largest left party, said the communist parties would pull support if the government sought clearance for the deal from the International Atomic Energy Agency (IAEA).

"The moment we come to know that they are going to the Board of Governors (of the IAEA), we withdraw," A.B. Bardhan, CPI chief, told reporters.

The parties have also said they could withdraw support 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.

In Washington, White House spokeswoman Dana Perino told reporters 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 Party has hinted it is willing to negotiate with the center-left Congress but also might want to keep its distance from a party hit by unpopularity among voters.

"Meeting Congress leaders does not mean we are extending support to the government," said SP leader Amar Singh.

The Samajwadi, a socialist party in Uttar Pradesh state with strong Muslim backing, was reported by the Times of India to be seeking removal of the nation's finance minister, central bank governor and the petroleum minister in return for SP support.

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. (Additional reporting by Nigam Prusty and Bappa Majumdar in New Delhi; Editing by Alistair Scrutton and Mary Gabriel) (For the latest Reuters news on India see: http://in.reuters.com, for blogs see http://blogs.reuters.com/in)

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