* Faced no-confidence vote from directors-sources
* Exit unexpected, seen improving corp governance
* Consummate navigator of Italy's intricate cross-holdings
* Shares end 3 percent up
(Adds company statement, updates shares)
By Alberto Sisto and Gianluca Semeraro
ROME/MILAN, April 6 (Reuters) - Powerful corporate networker Cesare Geronzi, a symbol of old-style Italian capitalism, unexpectedly quit as chairman of Generali after clashing with directors over strategy.
Geronzi, a 76-year-old former banker appointed a year ago at the helm of Europe's third-largest insurer, faced a no-confidence vote from a majority of board members at an emergency meeting called on Wednesday to discuss his powers, several sources familiar with the matter said.
Geronzi decided that "as a result of the situation that has developed owing to differences that prevent his involvement in Generali, to resign today from the post of chairman", Generali said in a statement.
Vice Chairman Francesco Gaetano Caltagirone will take over as interim chairman.
The no-confidence motion took the veteran financier by surprise as he only learnt about it one hour before the meeting was due to start, a shareholder source told Reuters.
His exit from Italy's No.1 insurer marks the end of an era for Geronzi, a controversial corporate insider with close links to Prime Minister Silvio Berlusconi who had formerly led top banks Capitalia and Mediobanca.
The news triggered a rally of up to 5 percent in Generali shares, which had lagged peers largely because of what analysts said was Geronzi's excessive meddling in company strategy despite his non-executive role.
"It is certainly a big step forward because of the problem of governance and it can clarify communications inside the company and with shareholders. It is important," Azimut fund manager Stefano Mach said.
Key to Geronzi's departure was the withdrawal of support by main shareholder Mediobanca, which owns 13.5 percent of Generali and had been instrumental in appointing him in the first place.
"Mediobanca effectively dumped him," said a senior financial source. "It sends a clear signal that a certain way of doing business cannot continue. For Italy, this is refreshing."
OPEN CLASH
Generali board member and Tod's owner Diego Della Valle had openly attacked Geronzi, saying his style of relying on personal links to wield power over the insurer had had its day.
Leonardo Del Vecchio, the founder of eyewear group Luxottica who is sitting on a 350 million euros ($499.6 million) loss on his 1.9 percent stake in Generali, quit the board in February citing his inability to influence strategy.
"The market can only take this decision positively. The rise in the share price speaks for itself," said Guido Giubergia, CEO of Ersel fund manager and an expert on corporate governance.
Generali shares closed up 3 percent at 15.93 euros.
Geronzi, appointed in April 2010 as a non-executive chairman, had clashed with other directors in the last few months after making comments on investing in banks which conflicted with management messages to investors.
The insurer posted 2010 net profit below expectations and is targeting higher operating profit for 2011.
Geronzi had little experience in the insurance sector when he was appointed last year. The former chairman of Capitalia has more than 40 years of experience in Italian banking, including more than 20 years at the Bank of Italy.
He is regarded as a consummate navigator of the intricate web of cross-shareholdings and power links which underpin Italy's industrial economy.
In 2007, Geronzi fell out with his chief executive at Rome bank Capitalia, Matteo Arpe, prompting his exit. The bank was eventually taken over by UniCredit.
Geronzi's career has not been free of controversy. In March, Italian prosecutors in Rome asked for an eight-year jail sentence for Geronzi over his alleged role in the 2003 bankruptcy of food company Cirio.
Lawyers for Geronzi said he had no specific powers on Cirio at the time and had acted correctly.
Generali, which has a market cap of 24 billion euros, is one of Italy's few multinationals and competes with Germany's Allianz and France's Axa.
(Writing by Nigel Tutt, Additional reporting by Nigel Tutt, Lisa Jucca and Claudia Cristoferi in Milan; editing by Elaine Hardcastle and David Cowell)