ROME- ArcelorMittal said on Monday it was withdrawing from a deal to buy Italy's struggling steel firm Ilva after the government removed previously agreed guarantees of legal immunity over its operations.

ArcelorMittal reached a deal last year to buy the heavily polluting Ilva, which is based the southern city of Taranto and employs some 8,000 workers in a region with one of the highest unemployment rates in Italy.

The promised legal shield would have given ArcelorMittal's managers immunity from prosecution related to a clean-up plan for the plant. However, the ruling 5-Star Movement has opposed handing the firm legal carte blanche, saying it was unfair to Taranto locals who might have suffered from the pollution.

(Reporting by Crispian Balmer) ((crispian.balmer@thomsonreuters.com; +390685224351; Reuters Messaging: crispian.balmer.reuters.com@reuters.net))