By James Grubel CANBERRA, Feb 16 (Reuters) - The opinion polls have turned strongly against Australia's conservative Prime Minister John Howard as support shifts to his youthful new rival, but analysts say he can still recover to win a fifth term in office. With national elections due in the second half of 2007, Howard, 67, has suffered the worst slump in the polls in six years and has uncharacteristically stumbled in the opening weeks of parliament against new challenger Kevin Rudd. Rudd, 49, elected leader of the centre-left Labor opposition party in December, has lifted his party's hopes of victory on the back of his promise to pull Australian forces out of Iraq and to sign the Kyoto protocol on climate change. Analysts say Howard, who won his fourth term in office in 2004 by promising to keep interest rates low, will claw back support when Australians focus on his strengths of the economy and national security. "The Reserve Bank holds the fate of the government in its hands," Monash University political analyst Nick Economou told Reuters. With record-low unemployment and inflationary pressures easing in Australia, Howard's supporters hope the central bank has stopped its cycle of interest rate hikes and may now look to a rate cut by the end of the year. Economou said an early rate cut would be devastating for Labor and could prompt Howard to run to the polls as early as possible from August. But it was more likely the government would use its May budget to re-focus the debate on the economy. "They may come up with big, big tax cuts, that will then re-focus the debate on the economy and back into an area of Howard's strength," Economou said. HOWARD STUMBLES The latest Reuters Poll Trend, which analyses the three main published opinion polls in Australia, found Howard's Liberal-National Party coalition trailed Labor by 13.4 points in February -- the worst result for the government since March 2001. The poll trend also found Howard has lost his commanding lead as preferred prime minister to Rudd -- the first time Howard has trailed as preferred prime minister since May 2001. The February polls appear to have rattled Howard, who made a rare mistake in parliament when he ruled out a link between greenhouse gases and global warming. He corrected himself hours later, saying he mis-heard the question, but not before the comments were broadcast on evening television news bulletins, further undermining his government's flagging support on environmental issues. In the past week, Howard prompted a heated debate about Australia's 1,400 troops in and around Iraq with unscripted criticism of U.S. presidential hopeful Barack Obama's plan to withdraw U.S. forces from Iraq in 2008.Howard found himself under fire at home and in the United States and was accused of meddling in U.S. politics, putting Australia-U.S. ties at risk because of his personal friendship and support for President George W. Bush."It has not been a good fortnight for the government," the Australian Financial Review's chief political correspondent, Laura Tingle, wrote on Friday. "They have now brought out the three bits of armoury -- economic management, national security, leadership -- which have stood them in good stead against all opposition leaders in the past, and they have not seemed all that effective." MIDDLE-AGED TODDLER Rudd, a Mandarin-speaking former diplomat who used to read transcripts of parliamentary debate as a child, has pushed his relative youth and family image, while Howard has countered by promoting his experience against Rudd's inexperience. Greg Craven, professor of government at Curtin University, said that while Rudd "must have seemed middle-aged as a child", he has highlighted Howard's age as a problem for the government. "Howard's greatest weakness is as obvious as it is embarrassing to state. He is growing old. Worse, he suddenly seems to be ageing more quickly," Craven wrote on Friday. Howard has twice clawed back from similar polls slumps, in 2001 and 2004, to win elections and notch up 11 years in power, and analysts and commentators warn it is too early to write his political obituary. "He's been down like this before," Economou said. "He's on much firmer territory on defence and foreign policy, and there's still the economic debate to unfold." ((Editing by John Chalmers; james.grubel@reuters.com; Reuters Messaging: james.grubel.reuters.com@reuters.net, +612 6273 2730))
