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Macron calls early election after far-right surge in EU

vote

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Finance minister predicts historic impact of French

election

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Possible hung parliament, risk to Macron's domestic agenda

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Euro and French stocks fall after far-right gains at EU

level

(Updates throughout with quotes, analyst, IOC, context)

By Michel Rose, Elizabeth Pineau and Tassilo Hummel

PARIS, June 10 (Reuters) - The snap election called by

President Emmanuel Macron after Sunday's bruising loss to the

far-right in European Parliament elections will be France's most

fateful legislative vote in decades, its finance minister said

on Monday.

Macron's shock decision amounts to a roll of the dice on his

political future and that of France. It immediately sent the

euro down, also hitting French stocks and government bonds.

The June 30 and July 7 ballot could, for the first time,

hand a great deal of power to Marine Le Pen's far-right National

Rally (RN), if they can transform their rising popularity into a

win at home too - where the vote would also be about trust that

it could run a major European government.

If the eurosceptic, anti-immigration RN did score a

majority, Macron would remain president for three more years and

continue to be in charge of defence and foreign policy.

But he would lose the power to set the domestic agenda,

ranging from economic policy to security and immigration.

The early election will also come shortly before the July 26

start of the Paris Olympics, when all eyes will be on France.

"This will be the most consequential parliamentary election

for France and for the French in the history of the Fifth

Republic," Finance Minister Bruno Le Maire told RTL radio,

referring to Charles de Gaulle's 1958 constitution, considered

the starting point of modern French politics.

A source close to Macron said the president hoped to

mobilise voters who abstained from voting on Sunday.

"We're going for the win," the source said. "There's

audacity in this decision, risk-taking, which has always been

part of our political DNA."

But another source close to Macron said: "I knew this option

was on the table, but when it becomes reality it's something

else ... I didn't sleep last night."

The euro fell 0.5% in early European trade, while Paris

blue-chip stocks dropped 2%, led by steep losses in banks BNP

Paribas and Societe Generale.

Helmed by 28-year-old Jordan Bardella, the RN won about 32%

of Sunday's European vote, over double the Macron ticket's 15%,

exit polls show, in part thanks to voter anger with Macron's

perceived hauteur, and concerns over immigration and the cost of

living. The Socialists came within a whisker of Macron with 14%.

Macron's decision aims to make the best of his weak

position, reclaiming the initiative and forcing the RN into

election mode faster than it would have liked.

Some RN leaders appeared to have been caught off-guard, even

if as early as February an RN source told Reuters they were

preparing for the possibility of such a scenario, looking at

which candidates they could field.

"We didn't think it would be immediately after the European

elections, even if we wanted it to be," RN deputy chairman

Sebastien Chenu said on RTL Radio. "Elections are rarely a gift

and in this context, they aren't."

Bardella will be the party's candidate for prime minister,

he added.

HUNG PARLIAMENT?

The result is hard to predict. It is likely to depend on how

committed leftist and centre-right voters are to the idea of

blocking the far-right from power. Voter turnout on Sunday was

about 52%, the interior ministry said.

A widely leaked unofficial poll from the end of last year,

the only recent one on snap elections, showed the RN on track to

double or triple its score and possibly obtaining a majority,

but it dates from December and more recent ones would be needed

to have a clear picture.

Macron's Renaissance party currently has 169 lower house

lawmakers out of a total of 577. The RN has 88.

Eurasia Group said the RN was no shoo-in for a majority,

predicting a hung parliament as the most likely scenario.

"Faced with another hung parliament, (Macron) will try to

form a wider alliance with the centre-right or centre-left,

possibly by appointing a prime minister from one of those

camps," the think-tank said in a note.

"We foresee a losing struggle for serious domestic reform or

strict deficit reduction in the remaining three years of

Macron's term," it said, adding: "Emmanuel Macron has taken an

enormous gamble, with his own reputation and legacy and the

future of France."

The dismal performance by Renaissance also hit the liberals

hard at the EU level, with the Renew group it belongs to falling

from 102 MEPs to 80.

This will all weaken Macron's hand in wider, European

Union policymaking, several diplomats told Reuters. "He is

weakened in France, and in Europe even more," one diplomat said.

On the Olympics front, however, the International

Olympics Committee was quick to say the snap election would have

no impact.

Meanwhile, the Kremlin said on Monday that it would

closely watch the snap election in France given what it called

the French leadership's "openly hostile" attitude towards Russia

over the

war in Ukraine.