Sarkozy woos far right after Hollande wins round one

(Reuters) - President Nicolas Sarkozy hammered home pledges to get tough on immigration and security on Monday as he sought to win over record numbers of far-right voters and whittle down Socialist Francois Hollande's narrow first-round election lead.

The centre-left Hollande pipped Sarkozy in Sunday's 10-candidate first round by 28.6 percent to 27.1 percent, but it was National Front leader Marine Le Pen who stole the show by surging to 18 percent, the biggest tally a far-right candidate has ever managed.

Her performance mirrored advances across the continent by anti-establishment Euroskeptical populists from Amsterdam and Vienna to Helsinki and Athens as the euro zone's grinding debt crisis deepens anger over government spending cuts and unemployment.

Sarkozy, the first sitting president to be forced into second place in the first round of a re-election bid, faced a difficult balancing act as campaigning restarted on Monday to attract both the far-right and centrist voters he needs to win the May 6 runoff.

"Today, I return to the campaign trail," Sarkozy said in a statement. "I will continue to uphold our values and commitments: respect for our borders, the fight against factories moving abroad, controlling immigration, the security of our families."

After five years of leading the world's fifth economy, a nuclear power and activist U.N. Security Council member, Sarkozy could go the way of 10 other euro zone leaders swept from office since the start of the crisis in late 2009.

Opinion polls on Sunday said 57-year-old Hollande, who has vowed to change the direction of Europe if elected by tempering austerity measures with greater social justice, would likely win the decider with between 53 and 56 percent of the vote.

But Le Pen's strong showing offered Sarkozy an unexpected ray of hope. "The breakthrough by Marine Le Pen throws the second round wide open," ran the headline in right-leaning Le Figaro newspaper, while left-of-centre Liberation wrote: "Hollande in front. Le Pen the killjoy".

HIGH TURNOUT

On a strong turnout of 80.2 percent, more than a third of voters cast ballots for protest candidates outside the mainstream, foreshadowing a possible reshaping of France's political balance of power at parliamentary elections in June.

"Nothing will be the same again," Le Pen, 43, daughter of former paratrooper and National Front founder Jean-Marie Le Pen, told cheering supporters on Sunday.

The gravel-voiced blonde, who wants France to abandon the euro currency, said she would give her view on the runoff at a May Day rally in Paris next week. But she wrote Sarkozy off as a departing president that would leave his party "in ruins", seeking to pick up the pieces in any recomposition of the right and carry the Front into parliament in June.

National Front Vice-President Louis Alliot suggested on Monday that Le Pen would not formally endorse either candidate as things stand. "Based on the ideas in our program, neither one defends or develops them, so it seems unlikely," he said.

Financial market analysts say whoever wins in two weeks' time will have to impose tougher austerity measures than either candidate has admitted during the campaign, cutting public spending as well as raising taxes to cut the budget deficit.

Hollande's campaign manager said victory was within reach, but the Socialist candidate was aware of the financial constraints that would face a future left-wing government.

"He wants to offer a dream, but he doesn't want to sell illusions to the French people," Pierre Moscovici told BFM TV. "Undeniably a first step toward change was taken yesterday."

INVESTOR JITTERS

Markets were a little dyspeptic after the French results and the Dutch government's failure to push through an austerity budget made elections there almost unavoidable. The euro retreated from two-week highs, European stocks opened lower, and safe-haven German bonds opened higher, increasing the premium investors demand to hold French and Dutch bonds.

"We've got a vote that is much more uncertain than we thought it would be," said Dominique Barbet, economist at BNP Paribas. "There's going to be some pretty hard campaigning, and the markets aren't going to like that. It's not going to be a very pro-European campaign."

Sarkozy challenged Hollande to three television debates over the next two weeks instead of the customary one. But Socialist aides said Hollande, who has no ministerial experience and is a less accomplished television performer than Sarkozy, had made clear he would accept only one prime-time live debate, on May 2.

Communist-backed hard leftist Jean-Luc Melenchon, who polls showed at one stage challenging Le Pen for third place, finished a distant fourth on 11.1 percent, ahead of centrist Francois Bayrou with 9.1 percent.

Political pundits said Hollande appeared to have larger reserves of second-round votes than Sarkozy, who would need to pick up at least three quarters of Le Pen's supporters and two thirds of Bayrou's to squeak a wafer-thin victory.

Polls taken on Sunday by three institutes suggested that between 48 and 60 percent of Le Pen voters planned to switch to the president, while Bayrou's backers split almost evenly between the two finalists, with one third undecided.

"The game is getting very difficult for Nicolas Sarkozy," Jerome Saint-Marie of CSA polling agency told i>TELE. "There's a genuine demand for social justice, precisely because times are hard and voters see sacrifices will have to be made ... What they want is that this pain is fairly shared."

Melenchon, whose fiery calls for a "citizens' revolution" drew tens of thousands to open-air rallies, urged his followers to turn out massively on May 6 to defeat Sarkozy, but he could not bring himself to mention Hollande by name.

Greens candidate Eva Joly endorsed Hollande, who can also count on the modest votes of two Trotskyist also-rans.

"Sarkozy is going to be torn between campaigning in the middle ground and campaigning on the right. He'll have to reach out to the right between the rounds, so he'll lose the centre," said political scientist Stephane Rozes of the CAP think-tank.

If Hollande wins, joining a small minority of left-wing governments in Europe, he has promised to renegotiate a European budget discipline treaty signed by Sarkozy. That could presage tension with German Chancellor Angela Merkel, who made the pact a condition for further assistance to troubled euro zone states.

The prospect of friction is causing some concern in financial markets, as is Hollande's focus on tax rises over austerity at a time when sluggish growth is threatening France's ability to meet deficit-cutting goals.