UPDATE 2-Belgian king asks Van Rompuy to form government

(Adds more background, analyst)

By Huw Jones

BRUSSELS, Dec 28 (Reuters) - Belgium's King Albert asked parliamentary speaker Herman Van Rompuy on Sunday to form a new government to end the third political crisis in a year and respond to a looming recession.

"He has accepted this assignment," the palace said in a short statement.

Flemish Christian Democrat Van Rompuy, 61, is president of the lower house of parliament. He faces the twin challenges of bridging the country's linguistic divide and tackling the fallout from the global financial crisis.

He is set to succeed fellow Christian Democrat Yves Leterme whose government collapsed on Dec. 19 after the Supreme Court said there were clear indications of political meddling in a court ruling over the bailout of stricken bank Fortis (FOR.BR).

Van Rompuy has the reputation of being both an intellectual and a budgetary hardliner. He was budget minister between 1993-1999 and brought Belgium's debt down sharply from some 130 percent of gross domestic product in his first year in office.

He has also expressed doubts about government plans to spend its way out of the current economic downturn.

Van Rompuy's appointment as "formateur" follows a six-day mediation mission by former prime minister Wilfried Martens. Belgian media said Martens' biggest task was persuading a reluctant Van Rompuy to accept the job.

"It is a bit of a surprise as he was refusing to do it. I think the pressure on Van Rompuy was huge," said Carl Devos, political scientist at the University of Ghent.

"He has respect from all parties. He's very experienced, but he's never led a government and this is certainly not the easiest time to be taking over," Devos said.

Belgium, host to NATO and the European Union, is expected to have slipped into recession in the fourth quarter and needs a government to enact an economic rescue package and wage deal as well as resolving the Fortis debacle.

Fortis investors, angry at seeing their shares tumble below 1 euro, won an appeal court ruling earlier this month freezing the group's break-up by the Dutch, Luxembourg and Belgium and latter's sale of Fortis assets to BNP Paribas (BNPP.PA).

They argue the deals should be renegotiated.

Van Rompuy referred to himself in an interview in Belgian newspaper De Standaard newspaper on Saturday as being in the "autumn" of his political career. "I feel myself to be anything but indispensable," Van Rompuy told De Standaard.

The Christian Democrat statesman was the only figure acceptable to all members of the five-party coalition, being respected both in the Dutch- and French-speaking parts of the linguistically divided nation.  Continued...