Libyan leader Muammar Gaddafi's invitation to hundreds of young women to convert to Islam overshadowed a two-day visit to Italy intended to cement the growing ties between Tripoli and Rome.

Prime Minister Silvio Berlusconi hailed Italy's relationship with Libya at an evening ceremony on Monday attended by some of the biggest names in Italian business, many hoping to pick up lucrative contracts in the energy-rich North African state.

Gaddafi called on the European Union to provide 5 billion euros (4.1 billion pounds) a year to help fight illegal immigration.

However, the mercurial leader attracted most attention earlier in the day by summoning busloads of young women hired by a hostessing agency to a meeting at a Libyan cultural centre near the Vatican and urging them to convert to Islam.

Media reports said three women had converted on Sunday, although it was not possible to verify if that was true.

It was very interesting, the role of the woman in Libya was very interesting, Barbara Persichetti, one of the women who attended told, Reuters Television.

The event, which repeated a similar operation on a previous visit to Rome last year, led to criticism from the media and opposition and embarrassment from many in Berlusconi's own centre-right camp.

What would happen if a European head of state went to Libya or another Islamic country and invited everyone to convert to Christianity? asked the newspaper Il Messagero. We believe it would provoke very strong reactions across the Islamic world.

Several commentators accused Berlusconi of sacrificing principles and dignity for the sake of trade and investment ties with Libya, whose huge sovereign wealth fund has invested heavily in Italy in recent years.

Ever since Gaddafi arrived here, he's been taking this country for a ride, like buying women, said Stefano Pedica, a senator from the opposition Italy of Values party.

OUTDATED IDEAS

The two leaders met for talks in the tent in which Gaddafi sleeps on foreign visits and discussed industrial cooperation projects and prospects for Italian firms in Libya, aides said.

At a display by Italian mounted police and a troop of about 30 horses and riders from Libya, Berlusconi said critics of the visit were prisoners of outdated ideas.

Ties have flourished since a 2008 deal in which Berlusconi agreed to pay $5 billion in reparations for Rome's colonial rule over Libya in the early 20th century and Italy is now Libya's biggest trading partner.

Among business leaders attending the ceremonial events was the head of defence engineering group Finmeccanica, Pier Francesco Guarguaglini, who said let's hope so, when asked about the prospect of winning business in Libya.

Italian business leaders have spoken favourably of Libya's record as an investor but Berlusconi's close relationship with Gaddafi has led to accusations that economic interests have overridden other concerns, notably human rights.

Opposition politicians have focussed in particular on a deal under which Libya has agreed to take back illegal immigrants trying to sail to Italy from its ports.

Politicians from the federalist Northern League party, Berlusconi's coalition partners in government, have already expressed concern about Libya's 6.7 percent stake in UniCredit, one of the country's biggest banks.

As well as its shareholding in UniCredit, Libya also owns a stake in oil company Eni and has expressed interest in many more, including power company Enel.

Against this background, many Italians were resigned to Gaddafi's behaviour.

This is the typical kind of stupid thing that Gaddafi says, we should just expect this kind of behaviour, Rome resident Marina Merni told Reuters. I am surprised we treat him as an honoured guest but clearly there is an economic interest.

(Additional reporting by Eleanor Biles and Alberto Sisto; editing by Andrew Dobbie)

Libya Storm