France gets new PM

PARIS, Tuesday (Reuters) French Prime Minister Jean-Pierre Raffarin became the first victim of a crisis over the European Union's constitution on Tuesday as EU leaders braced for Dutch voters to follow France by rejecting the new charter.

President Jacques Chirac accetpted Raffarin's resignation and appointed loyal ally Dominique de Villepin - an opponent of the U.S.-led war in Iraq - to replace him in a shake-up that had become inevitable after voters rejected the constitution.

The result of Sunday's referendum has plunged the 25-nation EU as well as France into crisis. Those problems are likely to deepen when the Netherlands holds a referendum on the treaty on Wednesday because opinion polls point to another heavy defeat. "We had hoped for a neck-and-neck race (but) ... it looks as if it is going to be a 'No' vote," Dutch Foreign Minister Bernard Bot told CNN television.

Concerns that the charter, intended to ensure the enlarged EU runs smoothly, is now close to death helped drive the euro down to new seven-month lows against the dollar and unsettled stocks and bonds.

The euro sank as low as $1.2312 on Tuesday before rising back to $1.2317. This reflected the EU's problems, which also include an early election in Germany, with which France is the traditional driving force of European integration.

"The magnitude of the French 'No' was surprising and it is likely to be 'No' with a fairly large margin in the Netherlands, and it terms of investor sentiment it raised political uncertainty," said Adam Cole, a senior currency strategist.

Nine countries representing nearly half the EU's 454 million citizens have approved the constitution, but Denmark, due to vote on Sept. 27, said next month's EU summit must decide if ratification should proceed in remaining member states.

The EU's first constitution sets new rules for the Union designed to make decision-making easier after it took in 10 new members last year, mostly from eastern Europe, but it requires the backing of all 25 member states to go into force.