ROME, July 4 (Reuters) - Champions Juventus should be relegated to the third division and three other top clubs thrown out of Italian soccer's top league, the prosecutor in a sports match-fixing trial said on Tuesday.
Stefano Palazzi told the tribunal that AC Milan, Lazio and Fiorentina should be despatched to Italy's second division, Serie B, and Juve also stripped of the Serie A titles they won in the last two seasons.
The prosecutor's demands are more severe than expected and came just hours before Italy were due to play World Cup hosts Germany in the semi-final in Dortmund at 9.00 p.m. (1900 GMT).
Juve are at the centre of Italy's biggest sporting trial after phone taps revealed one of its top managers discussing referee appointments with officials. Palazzi said Juventus should be relegated to 'below Serie B'.
The prospect of Italy's most successful team plummeting into the also-rans of soccer sent a shiver through investors and the Milan stock exchange suspended Juve's shares.
In another blow, Juventus said coach Fabio Capello had resigned. Real Madrid president Ramon Calderon said on Monday he would appoint Capello, one of Italian soccer's most successful managers, as coach to the Spanish giants.
Eight of the players likely to be in Italy's opening 11 against Germany are from teams standing trial. Juventus has five players in the Italy squad and three playing for France.
Former prime minister Silvio Berlusconi, the billionaire who owns AC Milan, said he was 'indignant' at the prosecutor's request to relegate his club and said Milan should be handed Juve's last two titles if the Turin team were found guilty.
'Milan have never had refereeing favours, on the contrary, they've been victims of refereeing favours in favour of other clubs,' he said.
After two days of procedural wrangling, the sports trial at Rome's Olympic stadium began in earnest on Tuesday with some of the 26 defendants - club officials, football federation staff, referees and linesmen - personally pleading their case.
The tribunal has said it aims to deliver its verdicts on July 10, the day after the World Cup final in Berlin. All the accused have denied wrongdoing.
Former Juve chief executive Antonio Giraudo was one of the first to speak.
'All kinds of things go on in football: people give Rolexes to referees, people fix the accounts. What I'm saying is that this is an environment in which you have to protect yourself,' he said.
Palazzi asked for Giraudo to be handed a five-year ban plus a 5,000 euro fine for every instance of sporting fraud.
He asked for the same punishment for Luciano Moggi, Juve's former general manager, for brothers Diego and Andrea Della Valle, the owner and president of Fiorentina, and for Claudio Lotito, the chairman of Lazio.
He also asked for all four teams to have points docked at the start of next season.
The lawyer representing former Italian Football Federation (FIGC) official Paolo Bergamo announced that his client had surrendered his membership of the FIGC and was not therefore liable to be tried by the sports tribunal.
Bergamo used to conduct the draw that assigned referees to Serie A matches.
Lawyer Gaetano Scalise criticised the tribunal's decision to allow intercepted telephone calls to be used as evidence and attacked the 'media circus' around the trial.
Those found guilty can appeal and the appeals process must be finished by July 27 - the deadline set by European soccer's ruling body for the FIGC to submit the list of teams for next season's Champions League and UEFA Cup competition.