UPDATE 1-Paris judge opens probe into African leaders' assets

* Three African leaders' luxury homes, cars under scrutiny

* Judge decides case raised by NGO should go ahead

* Case embarrasses presidents, could damage ties with Paris

(Adds lawyer's reaction, other details)

By Thierry Leveque

PARIS, May 5 (Reuters) - A French magistrate has launched a probe into whether the presidents of three African oil-producing countries used embezzled public funds to buy luxury homes and cars, the Paris prosecutors' office said on Tuesday.

The case could strain French diplomatic and business ties with Gabon and Congo Republic, two former colonies and close allies, and with Equatorial Guinea, a growing oil exporter.

"This is an unprecedented decision because it's the first time a judicial inquiry has been opened concerning suspected embezzlement by sitting presidents," said William Bourdon, a lawyer representing the plaintiffs in the case.

A 2007 French police probe found the leaders of the three countries and their families owned dozens of bank accounts, homes in rich areas of Paris and on the Riviera, and cars including Bugattis, Ferraris, Maybachs, Maseratis and a Rolls-Royce. [ID:nLR93828]