LONDON, Aug 26 (Reuters) - French stocks were set to

open sharply lower and its bonds tumbled on Tuesday as France's

minority government looked increasingly likely to be ousted next

month.

Three main opposition parties said they would not back a

confidence vote which Prime Minister Francois Bayrou announced

for September 8 over his plans for sweeping budget cuts.

Futures on France's blue chip CAC40 index were down 0.9%,

having fallen 1.6% late on Monday.

Its 10-year bond yield rose around 2 basis points in early

trade to around 3.51%, its highest since March. This

left the gap between French and German 10-year yields, a gauge

of the premium investors require to hold French debt, wider at

around 79 bps -- its largest since April.