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France's Hollande to buck Europe's austerity trend

05/07/2012 10:30 EDT | Updated 07/07/2012 05:12 EDT

Political upheavals in Europe, including a newly elected anti-austerity president in France and a Greek election that created a fractured parliament, are rattling economic markets and adding uncertainty to plans for eurozone spending cuts.

Socialist François Hollande, who swept to victory in France on Sunday, is insisting austerity measures announced by defeated incumbent Nicolas Sarkozy are not the only way to fix Europe's financial woes.

In his victory speech to supporters, Hollande said his win over Sarkozy sent a clear message that France did not want to be crippled by austerity measures. He said the message that change is coming is for people across Europe.

"In all the capitals, beyond government leaders and state leaders, there are people who, thanks to us, are hoping, are looking to us, and want to put an end to austerity," Hollande said.

The election results in both France and Greece caused world stock markets to dip early Monday because of renewed uncertainty over Europe's ability to deal with its debt.

Investors were particularly jittery over the Greek vote. The main exchange in Athens was down eight per cent in early trading after vote results in which no party looks like it will be able to form a government. The two parties that governed as a coalition for the past six months were pummelled to the benefit of more extreme parties of the right and left.

Elsewhere in Europe, Germany's DAX was down 1.4 per cent at 5,468, while the CAC-40 in France fell 1.2 per cent to 3,125. The FTSE 100 of leading British shares was closed for a public holiday. Similar dips in share prices were recorded earlier in Asia.

In the currency markets, the euro recovered some of its poise after falling to a three-month low against the dollar during Asian trading hours. It was up 0.4 per cent at $1.3018, having earlier fallen to a low of $1.2972.

Wall Street was also poised to open lower, with Dow futures and the S&P 500 futures both 0.7 per cent lower.

A spokesperson at the office of Nicolas Sarkozy, defeated Sunday after one term in office, said Monday that Hollande would be sworn in on May 15.

Arriving at his campaign headquarters a day after winning the second-round vote of the presidential election with 51.6 per cent of ballots cast, Hollande told reporters and a group of well-wishers that he would prepare to work immediately.

"I must prepare myself," Hollande said. "I said that I am ready, now I must be so."

He pointed out that "there is no transfer of presidential authority yet," but pledged that everything will be done "on time."

France suffers from high unemployment

During Hollande's campaign, he said he wanted to shift the focus back to economic stimulus.

Hollande's platform calls for:

- Rolling back the retirement age from 62 to 60.

- Hiring some 60,000 more teachers.

- Holding off balancing the budget until 2017.

- Imposing a 75 per cent top tax bracket on those earning more than a million euros ($1.3 million) a year.

"He has to make good on promises to give some hope to the French who are frustrated as many Europeans are about this program of austerity, and he needs to pull up the employment picture. Europe in general reached a record high of unemployment last week," CBC's Susan Ormiston said in Paris.

France, although it has been slightly insulated from eurozone economic woes, is also suffering from a slumping economy and has an unemployment rate of close to 10 per cent.

Canadian Prime Minister Stephen Harper called Hollande on Sunday and offered congratulations.

The two agreed to work together on a range of international issues and hold a bilateral meeting in the near future . Their first chance for a face-to-face meeting could come later this month at the G8 summit meeting in Chicago.

U.S. President Barack Obama said he looks forward to working closely with Hollande and his government on a range of shared economic and security challenges, and invited him to the White House this month.

Hollande's first visit as president will be to Berlin, where he will meet with German Chancellor Angela Merkel to discuss his goal for promoting economic growth. However, she has balked at Hollande's vision for renegotiating the deal by the 17 countries of the eurozone on curtailing spending.

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