France's far-right National Rally projected to win snap election without absolute majority
Macron calls early election after far-right surge in EU vote
Possible hung parliament, risk to Macron's domestic agenda
Euro and French stocks fall after far-right gains at EU level
Recasts with opinion poll, party talks
By Elizabeth Pineau and Michel Rose
PARIS, June 10 (Reuters) - The far-right National Rally was forecast on Monday to win a snap election in France but fall short of an absolute majority in the first opinion poll published afterPresident Emmanuel Macron's shock decision to dissolve parliament.
Following a massive loss for his Renaissance party inSunday's European Parliament election, Macron announced snap elections for the lower house of parliament, with the first round scheduled for June 30, less than three weeks away, and the run-off on July 7.
Marine Le Pen's anti-immigration, eurosceptic National Rally party, known as RN,would win 235 to 265 seats in the National Assembly,a huge jump from its current 88 but short of the 289 needed for an absolute majority, according to the survey by Toluna Harris Interactive for Challenges, M6 andRTL.
Macron's centrist alliancewould see its number of lawmakerspossibly halve, from 250 to 125-155, the poll showed on Monday. Leftwing parties could together control 115 to145 seats, though each party could run on its own.
There is no certainty the RNwould run the government, with or without analliance with others. Other scenarios include a wide-ranging coalition of mainstream parties, or a completely hung parliament.
But Macron's shock decision does offer the increasingly popular far right a real shot at power. Amounting to a roll of the dice on his political future, this immediately sent the euro down, while French stocks and government bonds tumbled. RN won 31.4% of the European Parliament vote while the Renaissance party coalition had 14.6%
Even if RN does score a majority in the French parliament, Macron would remain president for three more years and still be in charge of defence and foreign policy.
But he would lose control over thedomestic agenda including economic policy, security, immigrationand finances, which would in turn impact other policies, such as aid to Ukraine, as he would need parliament's backing to finance any support as part of France's budget.
"We're still in shock," Emmanuel Pellerin, a lawmaker from Macron's Renaissance party, told Reuters. "Everything points to the RN winning a relative or absolute majority. But that forces the French to think about what is at stake."
In that context, political parties were racing to field candidates and discuss possible alliances.
PARTY TALKS
RN leaders Jordan Bardella and Le Pen held talks on Monday with Marion Marechal of the smaller far-right Reconquete party. Marechal is Le Pen's niece and used to be a prominent member of her party before they fell out.
Bardella said after the meeting that talks were under way over forming an alliance. He added he was also talking with some members of the conservative Les Republicains.
"I fervently wish that we can find ways to all come together," Marechal told reporters.
Leaders of the very divided French left - the hard left LFI (France Unbowed), Communists, Socialists and Greens - were also holding talks.
"We don't have time to procrastinate," Manon Aubry, of LFI, told reporters. "The objective is to be able to meet again, to build the future and above all to go and win."
A source close to Macron said the 46-year-old leader, whose power has been diminished since he lost his absolute majority in parliament two years ago, calculated that there was a chance he could win back a majority by taking everyone by surprise.
For Le Pen and Bardella, the challenge is to transformpopularity into a win. The vote is likely to revolve not only around discontent with Macron's style of power, cost of living and immigration policies, but also about whether the RN can be trusted to run a major European government.
Among policies put forward by the party, the RN has proposed higher public spending, despite already significant levels of French debt, threatening to further raise funding costs at banks.
The RNalso wants to expel more migrants, stop family reunification, restrict childcare benefits to French citizens, give French nationals preference in access to social housing and jobs and withdraw residency for migrants who are out of work for more than a year.
The euro fell by as much as 0.6%, while Paris blue-chip stocks dropped by 1.4%, led by steep losses in banks BNP Paribas BNPP.PA and Societe Generale SOGN.PA.
The early election will come shortly before the July 26 start of the Paris Olympics, when all eyes will be on France.
Additional reporting by Ingrid Melander, Sophie Louet, Dominique Vidalon, Sudip Kar-Gupta, Tassilo Hummel, Blandine Henault, Benoit Van Overstraeten, Gabriel Stargardter, Dominique Patton, writing by Ingrid Melander; Editing by Angus MacSwan, Mark Heinrich, William Maclean and Cynthia Osterman
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