France's opposition Socialists were set for sweeping gains in local elections on Sunday, delivering a sharp blow to President Nicolas Sarkozy just 10 months after he swept to power.

The Socialists were on course to retain control of the capital Paris and appeared to have won a string of towns and cities from Sarkozy's centre-right UMP party, including its southern stronghold of Toulouse and Strasbourg in the east.

However, initial results indicated that the UMP had just managed to maintain its grip on France's third city, Marseille, saving itself from total humiliation in the nationwide vote.

The elections were the first electoral test of Sarkozy's popularity since his victory last May, but the mood has changed sharply since then as the economy has stumbled.

Government leaders maintained that voters had decided on local issues and that the result would not affect national policies, but they could not brush the result under the carpet.

"This is an evening of defeat," said Jean-Francois Cope, leader of the UMP parliamentary party.

Socialist leaders immediately called on the government to listen to voters and abandon "unjust" reforms but Prime Minister Francois Fillon said there would be no change of direction.

"We will not duck the difficulties, we will respect our commitments. With the President of the Republic, we will make France succeed," Fillon said in a televised statement.

DISCONTENT

Voter discontent over Sarkozy's glitzy lifestyle and brusque personal style combined with worry over the cost of living and eroding spending power have dented his image and sent his personal approval ratings into a nosedive.

After initially promising to play a leading role in the campaign, he has switched course, remaining in the background and leaving his increasingly popular prime minister Fillon to act as the government front-man in the campaign.

As if expecting defeat, he pledged last week "to draw the lessons from the election," although no major change of policy direction or cabinet reshuffle is expected.

Instead, he is expected to try to restore his image as president, attending events in the next few days commemorating the wartime resistance and the death of France's last World War One veteran.

Political sources suggest the president will announce a limited government reorganisation on Tuesday, possibly creating a handful of new posts, including a secretary of state to oversee the development of the greater Paris region.

Education Minister Xavier Darcos was toppled from his local powerbase as mayor of Perigueux in the south, but there was no indication he would lose his cabinet seat as a result.

Francois Bayrou, head of the centrist MoDem party, who came third in last year's presidential election, was embarrassingly beaten in the race for Pau in the south but pledged to continue with his drive to build a major third force in French politics.

"There will be other battles, there will be other fights and I promise you, there will be other victories," he said.