Despite accusations in both countries of interference, Merkel used a visit to Paris for a joint Franco-German cabinet session to make clear her support for Sarkozy, who has increasingly cited Germany as a model for France.

“We belong to the same political family. He supported me and it is natural that I support him in his campaign,” Merkel said during a joint television interview with Sarkozy to be broadcast later on French and German television.

Saying the two had worked together in a “friendly atmosphere” on the eurozone debt crisis, Merkel said they had a strong personal relationship.

Sarkozy said he was pleased to have won her support.

“The French people will decide themselves, like Germans decide, freely,” he said in the interview, but added: “When someone for whom you have affection and whom you admire says ‘I support your actions’, that pleases me.”

At a press conference after the cabinet session, Merkel dismissed criticism of her support for Sarkozy, saying: “It is normal that we support parties that are friends.”

Merkel recalled that Sarkozy had supported her in 2009 during her own election campaign, and said the French leader’s Socialist opponent François Hollande had recently come to Germany to address the opposition SPD.

Sarkozy thanked Merkel for her “friendship and trust” and — without citing him by name — slammed Hollande’s plan to renegotiate a eurozone fiscal compact seen by Berlin and Paris as a solution to the eurozone debt crisis.

He also denounced critics, in particular from the left, who have slammed Sarkozy for taking inspiration from the German model in efforts to reform France’s faltering economy.

“We are not jealous of them (Germany), we want to draw inspiration from them,” Sarkozy said, warning his opponents against “playing with feelings that remind us of periods that we do not want to see again.”

France and Germany were once seen as the twin motors of the European Union, but Paris is now clearly the junior partner, its economy lagging behind by any measure, and Sarkozy has turned to Berlin for ideas.

Sarkozy trails Hollande in opinion polls and Merkel fears that a new left-wing French administration will diverge from her austerity plans.

Speaking to reporters in Dijon, Hollande said “it says a lot about (Sarkozy’s) situation” that he was seeking Merkel’s support.

“For me the only test is the French people…. I don’t need the support of anyone but the votes of the French people,” he said, adding that Merkel would face a “tough task” in winning support for Sarkozy.

Sarkozy, still smarting from France’s loss of its AAA debt rating, cites Germany’s success almost daily to justify his own policies, drawing inspiration from both Merkel and her centre-left predecessor Gerhard Schroeder.

In Berlin, Merkel’s spokesman Georg Streiter said her active support for Sarkozy’s re-election campaign was a “personal” engagement as leader of Germany’s centre-right CDU party and not as the nation’s chancellor.

According to CDU general secretary Hermann Groehe, Merkel plans to support Sarkozy at campaign rallies ahead of France’s two-round presidential election, with a first round on April 22nd and a run-off on May 6th.

Sabine von Oppeln, a Berlin-based expert on Franco-German relations, said Merkel’s backing of Sarkozy was motivated by her efforts to reform Europe.

“With the euro crisis, she found in Sarkozy a partner who has largely supported her or at least not worked against her,” she said.

“There were numerous tensions between Merkel and Sarkozy in the past but today she is making a tactical calculation based on the fact that the two governments need Europe.”

German newspaper Süddeutsche Zeitung meanwhile wrote that Sarkozy had “latched his destiny to that of ‘dear Angela’ and the ‘German model’.”

“The time is long gone when he would, in private, call the chancellor ‘fatso’ and the Germans ‘the Boche’,” it wrote.

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Guéant, who is also responsible for immigration and is known as a hardliner, provoked a storm of controversy with the comments on Saturday.

“Contrary to what the left’s relativist ideology says, for us all civilisations are not of equal value,” Guéant told a gathering of right-wing students.

“Those which defend humanity seem to us to be more advanced than those that do not,” he said.

“Those which defend liberty, equality and fraternity, seem to us superior to those which accept tyranny, the subservience of women, social and ethnic hatred,” he said in his speech, a copy of which was obtained by AFP.

He also stressed the need to “protect our civilisation”.

“I do not regret (the comments),” Guéant said on Sunday, though he accused critics of taking them “out of context”.

The left denounced his speech as an attempt by President Nicolas Sarkozy to woo supporters of the the far-right National Front (FN) ahead of a two-round presidential election in April and May.

Harlem Desir, the number two in the French Socialist Party, slammed “the pitiful provocation from a minister reduced to a mouthpiece for the FN”.

Bernard Cazeneuve, a spokesman for Socialist presidential candidate François Hollande, denounced the remarks as “divisive and degrading” while former Socialist candidate Ségolène Royal called them “dangerous.”

Sarkozy’s allies were quick to defend the minister, however.

Defence Minister Gerard Longuet said it was simply “common sense” to suggest that civilisations could be ranked according to values such as “respecting personal rights, rejecting violence or abolishing the death penalty”.

Finance Minister François Baroin accused the left of “exploiting the statements for electoral gain”.

Foreign Minister Alain Juppé suggested that his colleague had meant to say that “all ideas, all political systems are not equal”.

Speaking on BFM television, Juppé said however one should avoid talking of a shock of civilisations, suggesting the term was “inadequate”.

Guéant has repeatedly linked immigration with crime in France and last month said the delinquency rate among immigrants was “two to three times higher” than the national average.

In April, he declared that an increase in the number of Muslim faithful in France posed a “problem”.

He has also said that he wants to reduce the number of legal immigrants entering France, including those coming to work legally or to join their families.

His latest comments came as the FN’s presidential candidate Marine Le Pen is credited with about 20 percent support in opinion polls.

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That the pair were to chair their 14th joint Franco-German cabinet session was not unusual, but the joint television interview that they were to give afterwards was billed as an unprecedented cross-border endorsement.

France and Germany were once seen as the twin motor of the European Union, but Paris is now clearly the junior partner, its economy lagging behind by any measure, and Sarkozy has turned to his fellow conservative for ideas.

Sarkozy trails Socialist challenger Francois Hollande in the opinion polls, less than 80 days before the French election, and Merkel fears that a new left-wing French administration will diverge from her austerity plans.

Specifically, Hollande has said he will seek to re-negotiate the hard-won eurozone “fiscal compact” that Merkel sees as essential to binding the single currency bloc together behind her deficit-cutting agenda.

Sarkozy, still smarting from France’s loss of its AAA debt rating, now cites Germany’s success almost daily to justify his own policies, drawing inspiration from both Merkel and her centre-left predecessor Gerhard Schröder.

The leader of Merkel’s CDU party, Hermann Gröhe, has confirmed that Merkel will support Sarkozy “at campaign events in the spring.”

The French and German leaders will therefore give a joint interview to their respective public television networks from Paris, after a meeting of their top ministerial teams in Sarkozy’s cabinet room at the Elysee Palace.

Despite the humiliation of the loss of France’s AAA, the governments believe the fiscal compact and the creation of a eurozone financial safety net in the form of a permanent bail-out fund have contained the debt crisis.

Now, they plan to turn to measures to prevent future crises and restart growth – while keeping a close eye on Greece and other weaker Mediterranean countries in case any backsliding on austerity measures spooks the markets.

Monday’s talks will concentrate on ways of harmonising corporate tax rates across the Rhine and on plans for a new financial transaction tax.

Both support the idea of such a tax – mocked as “madness” by their British colleague Prime Minister David Cameron, who fears it would drive finance houses out of Europe – but differences remain.

Sarkozy is so determined to burnish his credentials as a reformer in the twilight of his first term that he vowed France will go it alone with a 0.1 percent tax by August. Merkel still hopes for a joint European measure.

The French leader also claims German parentage for his plan to boost sales tax in order to fund a reduction in employer social security contributions, a reform he hopes will boost job creation in a stagnant economy.

Many in France have mocked Sarkozy’s new determination to celebrate the “German model” at every turn, but his supporters are convinced his relations with Merkel will pay off in the long run.

“By tying himself to other world leaders, Nicolas Sarkozy reinforces in French minds his image as a statesman… and reduces the Socialist candidate to nothing more than a mere opposition figure,” said a ruling party source.

In an interview with French television last Sunday, Sarkozy repeatedly referred to Germany’s economic success, noting that it had managed to save industrial jobs by keeping corporate payroll charges down.

Sarkozy supported Merkel in 2009 when she successfully ran for re-election, but some in his own camp are worried by the closeness between the pair.

“We must be careful not to appear to be following Germany’s lead,” said Lionnel Luca, a UMP lawmaker, warning against the “whiff of Germanophobia exuded by the Socialist Party for political reasons.”

Hollande has taken a strong lead ahead of the presidential vote, with polls showing him taking 28 to 30 percent of votes in the first round, ahead of 23 to 24 percent for Sarkozy. The first round of the election will take place on April 22 followed by a run-off on May 6.

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In comments aimed squarely at Nicolas Sarkozy after the French president reportedly criticised British industry, Cameron said the concept of the tax at a time of economic difficulty was “mad” and “extraordinary”.

“I know I used the word mad, but I do think it’s an extraordinary thing to do,” he told a press conference after a European Union summit in Brussels, referring to the introduction of the tax.

“The European Commissioner has told us this would cost Europe half a million jobs. Now when we’re all fighting for jobs and for growth, to do something that would cost so many jobs does seem to me to be extraordinary.

“And in the spirit of this healthy competition with France, if France goes for a financial transactions tax then the door will be open and we’ll be able to welcome many more French banks, businesses and others to the UK.”

“We’ll expand our economy in that way as well as by rebalancing it, because I think this is the wrong move.”

In a televised speech on Sunday, Sarkozy announced plans to introduce a 0.1 percent tax on financial transactions to come into effect from August this year in France.

He said in the same speech that Britain had no industry left, but while the British press played up the French president’s comments, Cameron played down suggestions of a rift.

Asked if he would be backing the French president’s re-election this year — as German Chancellor Angela Merkel’s party said she would — Cameron said he was a “big supporter and friend of Nicolas Sarkozy and I wish him well.

“I think he’s a remarkable man, I worked with him very closely over the Libya conflict, I think that was probably the closest that the British and French have worked together in the last 40 years, so I’m full of admiration for Nicolas,” he added.

“Every now and again he says something I don’t agree with — today when he said that Britain is short of industry, we actually have a larger industrial sector than France.”

Relations have been stormy between the two in recent months.

In December when Cameron criticised the eurozone’s efforts to tackle its debt crisis, Sarkozy reportedly snapped that — as Britain is not part of the single currency — Cameron should shut up.

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The line, which is due to be completed by 2023, would allow high-speed trains to link Paris and Turin in just over four hours, compared to seven at present.

The Lyon to Turin connection would be cut back from just over four to just under two.

Work will begin with the digging of a 57-kilometre tunnel (35 mile) tunnel under the Alps to link the border areas.

The €8.5 billion ($11.2 billion) tunnel will funded by France, Italy, and the European Union, with Italian Deputy Transport Minister Mario Ciaccia saying he hoped the EU would pay 40 percent of the cost.

The new line will take account of human and environmental impact studies on the Italian side of the border where violent protests took place last year, French Transport Minister Thierry Mariani said.

Last week some 40 people were arrested, with 26 of them detained, following violent protests in July over the project.

“A minority cannot upset a shared decision, along with a national and EU programme,” Ciaccia said, vowing to stand by the agreed timetable for building the link.

Early work to clear the way for the line started last summer in Italy’s northern Susa Valley amid a strong police presence as protesters sought to break through barriers erected around the controversial site.

Susa Valley residents fiercely opposed the plan, saying construction of tunnels would damage the environment.

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The right-winger has not confirmed he will stand for re-election, but he gave his strongest hint yet he will be a candidate in the election that opinion polls predict will be won by François Hollande.

“I have a rendezvous with the French. I will not shy away from it,” Sarkozy told journalists who pressed him on whether he would stand in the election, the first round of which will be held in April.

In an hour-long broadcast carried by six channels, Sarkozy unveiled plans for a hike in the sales tax to 21.2 percent and a 0.1 percent “Robin Hood” financial transaction tax.

He also promised a raft of measures on reducing work time to cut salaries to save jobs, increasing the number of young people taken on as apprentices and creating a new bank to invest in French industry.

Sarkozy’s ministers say he believes the reforms will show that, unlike Hollande, he is courageous enough to do the dirty work to save France from economic meltdown.

But the president, who staked his reputation on boosting the French economy, faces an uphill task. He is behind in the polls, unemployment stands at nearly three million, a 12-year high, and public debt is at record levels.

Sarkozy’s television appearance came a week after Hollande launched his own campaign with a blistering attack on the faceless” world of finance.

He later outlined his plans to reverse Sarkozy’s legacy, promising €20 billion ($26 billion) in new spending by 2017, the creation of 60,000 new teaching jobs and 150,000 state-subsidised new jobs for young workers.

An opinion poll this week said Hollande would take 56 percent of the votes in the second round of the election in May, with Sarkozy scoring 44 percent.

Sarkozy’s planned sales tax hike of 1.6 percentage points — to 21.2 percent — aims to shift the burden of paying for social security from employers to consumers, help create jobs and make French firms more competitive.

But some economists warn that the reform could hit domestic consumer demand, the main motor of the flat-lining French economy. Members of Sarkozy’s own UMP party also fear it could lose him votes.

Sarkozy said the new 0.1 percent tax on financial transactions would come into effect from August in France. He said it would enable French companies to keep jobs at home instead of out-sourcing them abroad.

He said he hoped to “create a shock” with the controversial tax and inspire other European countries to follow his lead, despite vocal opposition from some EU leaders.

Sarkozy used Sunday’s interview to argue that measures taken to end the financial crisis threatening Europe and the rest of world had started taking effect.

“Europe is no longer on the edge of the abyss,” he said. “The elements of a stabilisation of the financial situation in the world and in Europe are in place.”

His comments came as the sovereign debt crisis continues to dominate political debate in Europe and against a backdrop of frantic negotiations on a write-down deal between Greece and its creditors.

Sarkozy also said that France’s public deficit would be better than predicted for 2011, at 5.3 or 5.4 percent of gross domestic product instead of the 5.7 percent forecast.

The interview came two weeks after France suffered the humiliation of losing its top triple-A credit rating with Standard and Poor’s.

The president got unexpected support on Saturday when centre-right German Chancellor Angela Merkel’s party said she would join Sarkozy at campaign rallies in the coming weeks to boost his re-election chances.

Merkel may be worried that a Socialist victory in France could derail the German-led austerity drive — grudgingly backed by Sarkozy — that aims to resolve the European debt crisis.

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Vowing to reverse the legacy of right-wing President Nicolas Sarkozy, Hollande promised €20 billion ($26 billion) in new spending by 2017, the creation of 60,000 new teaching jobs and 150,000 new jobs for young workers.

He promised to have a balanced budget by 2017 and vowed to cancel about €29 billion in tax breaks, including €17 billion in breaks for big business.

“I only make promises that I will be able to keep, nothing more, nothing less. Everything I say will be done,” Hollande said as he presented the programme before 400 journalists and party loyalists at a union hall.

His goal, he said, “is to ensure that the French people can again believe in the future.”

The wide-ranging programme focused heavily on traditional Socialist values, from state-funded job creation to boosting taxes on the rich.

Accusing Sarkozy of granting €75 billion in “fiscal gifts” to France’s richest, Hollande vowed to “protect the middle class”.

He promised a significant reform of the tax system aimed at increasing taxes on the wealthy, including a new higher rate of 45 percent for incomes above €150,000 per year.

He vowed a 15 percent increase on taxes on bank profits and said he would focus on improving the climate for small businesses by creating a public fund to assist them.

Among the jobs to be created, he said, would be a 1,000 new public-sector jobs every year in the police and justice system.

Hollande also promised to cut by 30 percent the salaries of the president and government ministers and to introduce a form of proportional representation for parliamentary elections.

He made pledges too on increases in social housing, development plans for depressed suburban areas, granting marriage and adoption rights to homosexual couples and a reduction in France’s dependence on nuclear power from the current 75 percent to 50 percent by 2025.

On the international front, Hollande promised to immediately withdraw French troops from Afghanistan and proposed a new “responsibility, governance and growth pact” to address the eurozone economic crisis.

Sarkozy’s allies were quick to denounce the programme, with government spokeswoman Valérie Pécresse accusing Hollande of making irresponsible promises that would worsen public finances.

“This is a project that threatens the social model, France’s credibility and the French people,” said Pécresse, who is also budget minister.

“All of this is not serious, it would put France in the red. The budget deficit would continue to grow, the debt would continue to grow. There would then be no other solution than increasing taxes on the middle class.”

Hollande has consistently led opinion polls with 28-30 percent of votes predicted in the first round on April 22, ahead of 23-24 percent for Sarkozy, who has yet to officialy declare his candidacy.

Polls suggest that far-right leader Marine Le Pen of the National Front would garner 18-20 percent of votes and centrist candidate Francois Bayrou 12-14 percent — but their numbers are on the rise, at the expense of both Sarkozy and Hollande.

Hollande’s other opponents also slammed his programme.

“We will never return to a (budget) balance with this programme. It is not truthful, it is not imaginable. There is not a single measure for the economy in this programme,” Bayrou told Radio Classique.

On France Info radio, Le Pen called Hollande’s programme “a sanitised project” that is nothing more than “a version of the model… that is at the origin of the (economic) crisis.”

Analysts say Sarkozy is especially vulnerable on the economy, which has suffered from France’s exposure to the eurozone debt crisis and which some predict will enter a brief recession early this year.

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Da Vinci began painting “The Virgin and Child with Saint Anne” in 1503 and when he died in France in 1519 the unfinished work, depicting Christ beside his mother and grandmother with a sacrificial lamb, was acquired by King Francis I.

Restoration carried out in the past century left the “Saint Anne” disfigured by stains, on the Virgin’s dress for instance, due to the ageing of a substance in the varnish and in 2010 the museum decided to restore the work once more.

The “Saint Anne” is to be unveiled to the public in March as the highlight of a major exhibition built around it.

But the project hit a rock last autumn as critics warned that cleaning could damage the masterpiece, and two experts have since resigned in protest from the advisory committee set up to oversee the work.

Both are art world heavyweights: Segolene Bergeon Langle, who left in December, is a French national heritage curator, while Jean-Pierre Cuzin who left in the autumn is former chief curator of the Louvre’s painting department.

A French arts journal first sounded the alarm in October with an article entitled “Leonardo in danger”.

At stake was the type of solvent used to dissolve the yellow-brown coat of varnish covering the painting, deemed too harsh by critics who fear it could remove the actual paint.

Experts especially feared damage to the faces of Saint Anne and the Virgin Mary, and more broadly to the “sfumato” — layers of clear paint used by Da Vinci to produce smoky, softened contours, on this work as on the “Mona Lisa”.

Contacted by AFP last week, the curator Bergeon Langle said she left the advisory committee for several reasons.

“I deemed that the restoration was not being carried out in line with what I imagined was necessary for this Louvre painting. That is my firm belief.”

One critical point was the question of whether to remove a white patch on the body of the baby Jesus.

The museum’s chosen restorer Cinzia Pasquali, who worked on the paintings of the Chateau de Versailles’ Hall of Mirrors, was convinced it was a patch of varnish, turned white by microscopic cracks, and wanted to remove it.

Bergeon Langle believed it may have been added by Da Vinci’s own hand — and was wary of any intervention.

Finally Vincent Pomarede, the head of the Louvre’s painting department, went ahead and green-lighted its removal after having it analysed.

“On that issue, we were in disagreement,” he told AFP this week. “But I have the laboratory results and they are conclusive. I was certain it was a cracked varnish, and you can see plainly from the final result that it is.”

“I have no regrets,” said Pomarede, who has insisted the Louvre is not putting the work at risk.

Last autumn the Louvre invited journalists to view the painting in the workshops of the French Museums’ Centre for Research and Restoration, the C2RMF, next to the Louvre, to defuse tensions.

In 1994, the Louvre had to abandon an earlier plan to restore the “Saint Anne”, over fears for its delicate “sfumato”.

At the time, explained Pomarede, the Louvre did not have the technical know-how to protect the work. Now, however, he said it was possible to measure the thickness of the varnish down to the last micron.

On the subjects’ fragile faces, for example, the restorer left an extra thickness of varnish: 16 to 17 microns, against 8 to 12 microns elsewhere — and down from 30 to 35 microns previously.

Early this month the scientific committee met and handed down a “positive verdict on the thinning of the varnish and the removal in places of additional layers of paint,” said Pomarede.

“Two or three experts even wanted to go further” including removing secondary tree trunks that are thought to have been added in the 19th century,” said Pomarede — who ruled to keep the trunks as they are.

Since then the Louvre says tensions have simmered down with the dissenting experts.

Pasquali is putting the finishing touches to the work but this phase of the work is all reversible unlike removing varnish, and “should be a more serene period,” Pomarede said.

But Bergeon Langle, who was received by the head of the Louvre Henri Loyrette early this month and has another meeting planned with Pomarede, told AFP she still had “doubts” over the progress of the work.

“As a general rule, I prefer old works to be cleaned only very lightly. You can never retrieve the original colours, what you get instead is the current state of the painting materials. Leaving a slight veil over the work makes it more harmonious,” she explained.

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The slogan “We Are Legion,” the group’s online rallying cry, was inserted into the navigation bar of the official Elysee site’s (www.elysee.fr).

Before the end of the day, the site had been restored to normal.

The group’s action appeared to be linked to France’s stance on the US clampdown on file-sharing.

French Culture Minister Frederic Mitterrand on Friday denounced those behind the file-sharing site Megaupload.com as delinquents, backing the US decision to shut it down.

“It is delinquency, it is theft,” the minister said in an interview with BFM TV, denouncing what he called the site’s massive violations of copyright law.

“The truth is that they are stealing on a large scale,” he added.

The US Justice Department and FBI indicted seven people for “massive worldwide online piracy of numerous types of copyrighted works, through Megaupload.com and other related sites”.

Washington wants the extradition of four of the company’s senior figures from New Zealand to face prosecution for online piracy, racketeering and money laundering that could carry jail time of up to 20 years.

The Anonymous group had earlier shut down the FBI and Justice Department websites for several hours.

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Market players said position unwinding might give the euro a further lift in the near-term, with one possible upside target at $1.3077, the single currency’s high so far in January.

Greece’s negotiations with creditors on a debt swap remain a major worry, but any positive news there could see investors continue to cut bearish positions in the single currency, analysts said.

“If the Greek debt talks do break down, clearly that is going to be one of the risks” to the euro/dollar, said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.

“I suppose markets will look for any sign that the talks are progressing today to help to sustain the rally in euro,” he added.

The euro held steady at $1.2963, well above a 17-month low of $1.2624 hit late last week on trading platform

EBS.

The single currency has risen about 2.6 percent against the dollar so far this week, putting it on track for its biggest weekly percentage rise since October.

Against the yen, the euro was little changed near 100.00 yen, having rebounded since hitting an 11-year low of 97.04 yen on January 16.

The euro clung to gains made the previous day after successful bond sales in Spain and France.

Spain passed its biggest test of market sentiment on Thursday, selling more longer-term debt than hoped. France’s debt auction also drew strong demand, signalling that markets have largely shrugged off last week’s salvo of euro zone rating downgrades from Standard & Poor’s.

A trader for a European bank said the euro might test $1.3000 in the near-term but have trouble breaking it in Asia, even as some investors trim short euro positions ahead of next week’s Lunar New Year holidays.

“People who were happy to be short at $1.2800 and $1.2900 have covered, but there are still some who are happy to be short at $1.3000,” the trader said, adding that there were stop-loss bids placed just above that level.

Traders warned that the euro was still in a downtrend, and only a break above the October low at $1.3145 would suggest an interim base has formed.

Market players still see downside risks to the euro in coming months, due to nagging concerns that the euro zone economy may slip into recession and limit progress toward fiscal consolidation in the region.

With the Greek debt swap talks yet to be resolved, traders are also fretting the risk of a disorderly default by Greece, which faces bond redemptions in March.

The euro and the risk-sensitive Australian dollar took in their stride a signal showing that China’s manufacturers started 2012 in a sluggish mode.

The HSBC flash manufacturing purchasing managers index (PMI), the earliest indicator of China’s industrial activity, stood at 48.8 in January, below the 50 level that demarcates expansion from contraction.

Still, it came in at a three-month high and was a slight improvement on the 48.7 final reading of the December index.

The Australian dollar eased 0.1 percent to $1.0408, hovering near an 11-week high of $1.0450 hit earlier this week.

The dollar was stuck near a two-week low against a basket of currencies, in the wake of the euro’s recent rally.

The dollar index stood at 80.096, having dipped to 80.041 the previous day, its lowest level since January 4.

Against the yen, the dollar held steady at 77.14 yen, hovering near the top end of its 76.30 yen to 77.342 yen range so far in January.

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