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France faces coalition puzzle after left-wing surge

Unexpected outcome leaves country in limbo before Olympics

French President Emmanuel Macron on Monday asked his prime minister to stay in the role for now, pending what will be difficult negotiations to form a new government after a surprise left-wing surge in elections that delivered a hung parliament.

The leftist New Popular Front (NFP) emerged as the dominant force in the National Assembly after Sunday's election, thwarting Marine Le Pen's quest to bring the far right to power.

However, with no single group securing a working majority, the outcome heralded a period of political volatility just before the Paris Olympics and raised uncertainty among investors about who would run the euro zone's second largest economy.

The range of possibilities include the NFP forming a minority government or the cobbling together of an unwieldy coalition of parties with almost no common ground.

Prime Minister Gabriel Attal, a centrist and close ally of Macron, tendered his resignation but the head of state rejected it.

"The president has asked Gabriel Attal to remain prime minister for the time being in order to ensure the country's stability," Macron's office said in a statement.

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 left won 182 seats, Macron's centrist alliance 168 and Le Pen's National Rally (RN) and allies 143, Interior Ministry data cited by Le Monde newspaper showed.

Interior Minister Gerald Darmanin was seen entering the Elysee presidential palace shortly after Attal, suggesting the president was canvassing opinions from his allies about what to do next.

Leaders of the component parties of the NFP met overnight and were due to meet again later on Monday to discuss who should replace Attal and what strategy the alliance should adopt, said a source at the Communist Party, one of its smaller members.

NO CONSENSUS ON LEFT

The NFP, hastily assembled for this election in an attempt to unify the left-wing vote against the far right, has no single leader and did not say before the election who would be its pick for prime minister.

Green leader Marine Tondelier, one of a number of NFP figures seen as potential candidates for the post, said on France Inter radio it could be someone from the hard-left France Unbowed party, the Greens or the Socialists, the three largest parties in the alliance.

But there appeared to be no consensus on big questions such as whether the bloc should seek support from other forces such as Macron's centrists.

Olivier Faure, the Socialist leader, said on France Info radio that 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 centrist camp.

France Unbowed's firebrand leader Jean-Luc Melenchon, one of the most divisive figures in French politics, explicitly ruled out any deal with centrists on Sunday, and on Monday his ally Eric Bompard sounded uncompromising.

"The president must appoint as prime minister someone from the New Popular Front to implement the NFP's programme, the whole programme and nothing but the programme," he said on France 2 television.

However, there is little chance that any of the left-wing bloc's key proposals, which include raising the minimum wage, reversing Macron's pension reform and capping the prices of key goods, would pass a parliamentary vote without some kind of agreement with lawmakers from outside the bloc.

The NFP's programme, which if implemented would be likely to further strain France's already overstretched public finances, was viewed negatively by financial markets before the election. The bloc's unexpected electoral success could raise questions about France as an investment destination.

CENTRISTS OPEN TO NEGOTIATION

Some prominent centrist figures said they were ready to work on a pact to ensure a stable government, but were not prepared to work with France Unbowed, a force seen by many French centrists as just as extreme as the RN.

The euro slipped on Monday by as much as 0.4 per cent as investors grappled with the uncertainty in Paris.

"There's really going to be a vacuum when it comes to France's legislative ability," said Simon Harvey, head of FX analysis at Monex Europe in London.

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

For Le Pen's RN, the result was a huge disappointment after weeks during which opinion polls consistently projected it would win comfortably.

The left and centrist alliances cooperated after the first round of voting last week by pulling scores of candidates from three-way races to avoid splitting the anti-RN vote.

Le Pen, who will likely be the party's candidate for the 2027 presidential election, said however that Sunday's ballot, in which the RN increased its share of the vote compared with previous elections, had sown the seeds for future victory.