World

French President Nicolas Sarkozy''s UMP party has been beaten by the opposition Socialists in the first round of regional elections on Sunday, exit polls said, suggesting the center-right was set for a hefty defeat.

Sarkozy has sought to play down the importance of the vote, saying it would have no impact on his reform drive, but the scale of the projected loss could give the Socialists a huge boost after years of bitter infighting.

Unemployment in France is running at more than 10 percent, public finances are under growing strain and a series of controversies over issues ranging from lavish executive pay to immigration and security have undermined Sarkozy''s popularity.

A second round ballot will be staged March 21, with leading parties going forward to the conclusive vote which will decide who runs France''s 26 regions.

Exit polls by Opinionway and TNS Sofres showed the Socialists winning up to 30 percent of the vote on Sunday against as little as 26.5 percent for the UMP and its close allies.

The surveys also showed that the far-right National Front and the Greens had done surprisingly well, giving them the chance to play a significant role in the second round.

However, the abstention rate was put at some 52 percent, which is a record for a regional election. Pollsters said a low turnout was likely to penalize Sarkozy''s allies in particular, with his supporters lacking the motivation to cast a ballot.

Sarkozy has said the election was about local issues and he has ruled out a major reshuffle. However, he said last week that he would be "attentive" to what voters say and some cabinet changes are possible.

The 26 regional councils in the euro zone''s second largest economy, responsible for issues ranging from maintaining school buildings to local transport, have little economic power and normally attract scant interest.

But the message the vote sends will be closely watched outside France for the possible impact on the pace of reform and for the future of key government ministers including Economy Minister Christine Lagarde and Prime Minister Francois Fillon.

"What matters most for financial markets is the distribution of votes in the first round and whether or not this can be depicted as a ''no confidence vote'' in the government," BNP Paribas analyst Dominique Barbet said in a note to clients.

With the public deficit seen at 8.2 percent of gross domestic product after the billions of euros in stimulus measures pumped into the economy last year, the government faces a major task to get state finances back under control.

Sarkozy has pledged to continue with a major overhaul of the pension system due to be completed later this year but in an interview with Le Figaro newspaper last week, he signaled a pause in the pace of reform next year.