UPDATE 2-Investors signal risks ahead of key cabinet meeting on Atlantia licence

(Recasts to add comments from investors, unions)

By Giuseppe Fonte and Francesca Landini

ROME, July 14 (Reuters) - Investors and unions signalled risks ahead of an Italian cabinet meeting late on Tuesday that was expected to consider whether to strip Atlantia of its toll road licence following a bridge disaster in 2018.

Fondazione CRT, which owns nearly 5% in Atlantia, and a key foreign shareholder in motorway unit Autostrade per l'Italia warned that the government could scare off foreign investors if it revoked Autostrade's licence.

Employees and small savers would bear the brunt of the government decisions, the investors and unions said.

Prime Minister Giuseppe Conte has made clear he believes Autostrade should lose its licence over management failures leading to the collapse of a bridge it operated in the northern city of Genoa. Forty-three people were killed.

But Conte's fragile coalition government has split over the issue, with some ministers concerned that ditching the concession could trigger a costly legal battle for an already heavily indebted Italian state.

Neither officials nor company executives could say whether a final ruling would emerge after the cabinet meeting, which was pushed back to 10 p.m. (2000 GMT) from Tuesday morning.

An Atlantia board meeting on Tuesday morning ended with no decisions, a source close to the matter said. Another source said the board would reconvene on Wednesday morning.

The battle over Autostrade, which operates around 3,000 kilometres (1,850 miles) of Italy's highway network, has become intensely political, much of it focusing on the role of the powerful Benetton family, Atlantia's biggest shareholders.

The anti-establishment 5-Star Movement has been determined to drive the Benettons out of motorways, creating tensions with its coalition partners, who fear a possible hefty compensation claim.

There has also been concern in the centre-left Democratic Party (PD) and the centrist Italia Viva group over the impact on jobs and the running of the motorways, as well as possible financial market disruptions, if Autostrade is forced to default on some 10 billion euros of debt.

A key foreign investor in Autostrade told Reuters the company had met all government requests with its last offer tabled on Saturday.

"There is a very strong proposal on the table and if the government wants to send the company into default it would be a scandal," the investor said.

"We are very worried about the fate of Atlantia's more than 10,000 direct employees and another 10,000 in the supply chain," the CISL trade union said in a statement.

Earlier on Tuesday, Benetton holding company Chairman Gianni Mion said Conte's position on the issue was understandable given the tragedy surrounding the Morandi bridge collapse but the family hoped for a "fair" solution. (Additional reporting by Stephen Jewkes; writing by James Mackenzie and Francesca Landini; editing by John Stonestreet and Mark Heinrich)