* Says if Europe ignores growth, stability is impossible
* Not seeking rule change but more flexible interpretation
* Commission president choice must be part of wider package (Adds comment from Juncker, opposition, background)
By James Mackenzie
ROME, June 24 (Reuters) - Italian Prime Minister Matteo Renzi called on Tuesday for a change of course in Europe, saying austerity policies on their own could not guarantee fiscal stability as unemployment rises and economies stagnate.
Speaking in parliament ahead of this week's European Union summit, Renzi said Italy was not asking for a relaxation of EU budget rules but for existing rules to be flexibly applied in exchange for a three-year programme of structural reforms.
"It is obvious that the trade-off between the reform process and the use of the margins for flexibility which already exist and which are available to member states is what has always happened," he said.
Renzi said that when Italy takes over the EU's six-month rotating presidency next month, he would outline a "1,000 day" programme for which he would seek parliamentary approval and that would be achieved by May 2017.
Speaking as leader of a country whose economy has not grown for more than a decade and which has more than 40 percent youth unemployment and massive debts, Renzi said the "high priests" of austerity risked condemning Europe to stagnation.
"The treaty obliges us to look at growth and stability as elements which go together. There can be no stability possible if there is no growth in Europe and economic policies of recent years have failed because of this," he said.
From the moment Renzi assumed office in February, the former mayor of Florence has made ambitious promises, pledging sweeping reforms in his first three months in office. But the difficulty of pushing through change in Italy was underlined by the unspoken admission that the timetable has slid back.
"Today we've seen that the 100 days of Matteo Renzi, who promised a reform a month, has turned into a three-year agenda," Emanuele Prataviera, an opposition Northern League deputy, said in the debate following Renzi's speech to parliament. "But in Europe, he'll have six months and he can't mess it up."
BATTLE OVER COMMISSION PRESIDENT
What concrete effect Renzi's call for more flexibility will have remains unclear. All sides agree that Europe must grow and must apply EU budget rules intelligently but there is little clarity about whether and under what circumstances member states will be given leeway on strict deficit and debt rules.
The issue has played into a battle over the next president of the European Commission, one of the most sensitive issues facing the June 26/27 summit.