French poll forces Sarkozy into cabinet rethink

By Jon Boyle

PARIS (Reuters) - French President Nicolas Sarkozy was forced into a cabinet rethink on Monday after losing a senior minister in a parliamentary election that gave him an unexpectedly small majority, but his reforms remained on track.

Centre-right allies tried to mask their disappointment at Sunday's vote, which saw them miss out on a widely predicted landslide following a week of poorly managed debate over a possible hike in value-added tax (VAT).

But the shock defeat of government No. 2 Alain Juppe, a former prime minister and cabinet heavyweight, in his Bordeaux fiefdom left Sarkozy facing an unwanted reshuffle.

"You'd really love things to be bad for me. You'd be happy if I died," an embittered Juppe snapped at reporters.

His defeat sent a warning to Sarkozy that the French voters wanted change but were not ready to hand him a blank cheque. It also provided an unexpected boost to the beleaguered Socialists, who had feared an electoral meltdown.

Economy Minister Jean-Louis Borloo was being touted as a possible replacement for Juppe at the newly created energy and environment ministry, though some conservatives say Borloo's unguarded comments on VAT had cost the right dozens of seats.

Former foreign ministers, Socialist Hubert Vedrine and conservative Michel Barnier, were also linked to the job.

The appointment could come as early as Tuesday along with a handful of junior minister posts.