France hails new leader

Amid new eurozone debt concern:

FRANCE: France's president-elect Francois Hollande set about the task of building his government and ties with allies on Monday as world markets eyed political developments in the eurozone with concern.

The 57-year-old Socialist won power Sunday in a close race against France's outgoing right-wing leader Nicolas Sarkozy, triggering joyful street parties, and now faces the immediate challenge of dealing with Europe's debt crisis.

A date for the formal handover of power has not yet been set -- it should come before May 15 -- but Hollande has begun consultations with European allies, including telephone talks with Germany's Chancellor Angela Merkel.

Asian markets and the euro slumped on Monday amid concerns that victories for Hollande in France and for opposition parties in Greece marked a backlash against austerity measures designed to contain the eurozone crisis.

Hollande, while no radical, has vowed to slow the pace of Sarkozy's public spending cuts and renegotiate the EU fiscal pact, under which the 17 members of the single currency bloc agreed tough measures to slash their deficits.

Debt-wracked Greece is facing political and economic turmoil after parties opposed to its EU and IMF-led austerity programme stripped the coalition government of its majority and an extreme right-wing group won its first seats in 40 years. The uncertainty depressed Asian markets: Tokyo dived 2.75 percent, Hong Kong slumped 2.43 percent, Sydney fell 1.84 percent, Seoul shed 1.81 percent, Wellington was 0.38 percent lower and Shanghai lost 0.26 percent.

In France, Hollande's economic plan replaces some of Sarkozy's cost-cutting with higher taxes on the wealthy but still foresees a balanced budget by 2017, despite a hiring spree in education and a return to retirement at 60. Bond markets have had six months to get used to the idea of a return to Socialist rule, and panic is not expected, but if concerns over Paris lead to higher borrowing costs then the deficit target will be harder to meet.

In his victory speech on Sunday, Hollande admitted that the eyes of Europe and the world were on France, but promised to carry through on his promise to revise the hard-won EU stability pact to focus more on growth than cuts.

AFP