France faces coalition puzzle after left-wing surge in election

By Elizabeth Pineau and Dominique Vidalon

PARIS (Reuters) -The French left said it wanted to run the government but conceded on Monday that talks would be tough and take time, after Sunday's election thwarted the far right's quest for power but delivered a hung parliament.

Many of France's allies breathed a sigh of relief after Marine Le Pen's National Rally (RN) failed to win the snap election called by President Emmanuel Macron.

But with the leftist New Popular Front (NFP) alliance, hastily assembled before the election, unexpectedly coming first but far from an absolute majority, the election heralded a period of volatility and possible gridlock.

"It's not going to be simple, no, it's not going to be easy, and no, it's not going to be comfortable," said Green party leader Marine Tondelier. "It's going to take a bit of time."

Possibilities include the left forming a minority government - which would be at the mercy of a no confidence vote from rivals unless they reach deals - and the cobbling together of an unwieldy coalition of parties with almost no common ground.

"We'll need some time," NFP lawmaker Pouria Amirshahi told Reuters as newly elected lawmakers arrived in parliament to pick up their badges and settle in, adding that any option was complex.

The NFP has no single leader and, with an estimated 182 MPs, is far short of the 289 threshold needed for an absolute majority. No other group has a majority either. Macron's centrists came second and the RN third, leaving parliament split in three groups.

"The President of the Republic must call on us to run the government, to respect the outcome of the election," Manuel Bompard, of the hard left France Unbowed said before a meeting with the Socialists, Greens and Communists to decide on what strategy the NFP would take.

For Le Pen's RN, the result was a disappointment as opinion polls had for weeks projected it would win, RN lawmaker Laurent Jacobelli told Reuters, even if they increased their number of MPs by more than 50 to 143.

RN leader Jordan Bardella acknowledged that the party had made mistakes, including on the choice of some of its candidates, but assured that Sunday's ballot had sown the seeds for future victory for the far right.

Meanwhile, Prime Minister Gabriel Attal, a centrist and ally of Macron, tendered his resignation but Macron asked him to stay on for now "in order to ensure the country's stability," the president's office said.

WEAKENED FRANCE?

A fragmented parliament will make it hard for anyone to push through a domestic agenda and is likely to weaken France's role in the European Union and further afield.

"The most immediate risk is a financial crisis and France's economic decline," said the current finance minister, Bruno Le Maire.

Despite the uncertainty, some voters were happy with a three-way parliament.

"I think it's great to have a diverse assembly like this, with roughly equal groupings. They will have to get along," Valerie, who works in luxury, said in Paris.

But Jean-Eudes du Mesnil, of the CPME small and medium businesses union, was "worried because a number of things have been announced, notably by the Popular Front platform."

"We'll see whether they're applied or not, but there are certain measures that are simply unthinkable," he said, including among these a big increase in the minimum wage.

There appeared to be no consensus on the left on key questions such as whether the bloc should seek support from other forces such as Macron's centrists.

Olivier Faure, the Socialist leader, told France Info radio he expected the parties to agree on a plan this week, but sidestepped a question on whether the NFP would be prepared to negotiate a deal with Macron's camp.

France Unbowed's divisive firebrand leader Jean-Luc Melenchon has ruled out any deal with centrists.

But the left-wing bloc, whose main proposals include reversing Macron's pension reform and capping prices of key goods, will need some kind of agreement with lawmakers from outside the bloc if they are to govern.

MACRON ECLIPSED

The NFP's programme, which if implemented would be likely to further strain France's overstretched public finances, was viewed negatively by financial markets before the election.

The euro slipped on Monday by as much as 0.4% as investors pondered the uncertainty.

Some prominent centrists said they were ready to work on a pact but would not work with France Unbowed, which many French centrists consider as extreme as the RN.

Macron, whose term ends in 2027, looks unlikely to be able to drive policy again, though he had already pushed through much of his agenda including increasing the pension age, a move that caused street protests, and a divisive immigration bill.

With 32.05% of the votes, the RN won more votes than any other single party on Sunday but alliances, tactical voting and its own mistakes prevented it winning.

Adélaïde Zulfikarpasic, of BVA Xsight pollsters, questioned the RN's preparedness and said some voters still found it "a little scary".

In Boulogne-sur-Mer, in northern France, 61-year old retired fisherman Denis Dewet, drawing parallels with presidential elections said: "It's because France doesn't like the extremes."

(Additional reporting by Antony Paone, Tassilo Hummel, Bart Biesemans, Jean Terzian, Ingrid Melander, Sudip Kar-Gupta, Benoit Van Overstraeten, Michel Rose and Zhifan Liu; Writing by Ingrid Melander, Estelle Shirbon, Richard Lough; Editing by Janet Lawrence, Keith Weir and Timothy Heritage)