France shifts to the left, but risk of policy paralysis looms

France faced a hung parliament and the prospect of taxing negotiations starting on Monday to form a government after a surprise left-wing surge blocked Marine Le Pen's quest to bring the far-right to power.

The leftist New Popular Front (NFP) emerged as the dominant force in the National Assembly after Sunday's election, but with no single group securing a working majority the possibilities include the NFP forming a minority government or the building of a broad, unwieldy coalition.

The result delivered a stinging blow to President Emmanuel Macron and leaves the euro zone's second largest economy in limbo, heralding a period of political instability weeks before Paris hosts the Olympic Games.

Macron ended up with a hugely fragmented parliament  in what is set to weaken France's role in the EU and further afield, and make it hard for anyone to push through a domestic agenda.

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.

Prime Minister Gabriel Attal said he would tender his resignation, but it was not clear whether the president would accept it immediately, given the daunting task ahead to form a government. Attal said he would be willing to stay on in a caretaker role.

"I will of course do my duties as long as it's needed. It cannot be otherwise on the eve of a date (the Olympics) that is so important for our country," Attal said as it became clear Macron's alliance had endured a humbling setback.

Parties from the NFP - made up of the French Communist Party, hard left France Unbowed, the Greens and the Socialist Party - met overnight for first talks on how to proceed.

France Unbowed's firebrand leader Jean-Luc Melenchon said the new prime minister should hail from the FP. However, the bloc has no leader, and its parties are strongly divided over who they could select as a suitable premier.

Some prominent centrist figures, including Edouard Philippe, a former prime minister under Macron, said they were ready to work on a pact to ensure a stable government.

The euro fell on Sunday after the vote projections were announced.

"There's 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.

For Le Pen's RN, the result was a far cry from 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 build a unified anti-RN vote.

In his first reaction, RN leader Jordan Bardella, Le Pen's protege, called the cooperation between anti-RN forces a "disgraceful alliance" that he said would paralyse France.

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 made major gains compared with previous elections, had sown the seeds for the future.

"Our victory has been merely delayed," she said.

When darkness fell on Sunday, the statue of Marianne in Place de la Republique was lit up by fireworks amid celebrations by left-wing supporters. Marianne is a national symbol of France, representing reason, liberty and the ideals of the republic.

Baptiste Fourastié, a 23-year-old designer in Place de la Republique, said: "We weren't expecting it, neither were the polls. We are happy the French people succeeded once more in blocking the far-right."

However, he was worried they right may grow in strength and win next time if the next government is not beyond reproach.

He said: "It will be difficult with a hung parliament, but better than if it was the far-right (ahead)."

Reuters