YOURS TRULY: New French Prime Minister Lionel Jospin waves to supporters as he arrives at the Socialist Party headquarters in Paris early on Monday. Leftists won the second round of elections on Sunday.

PARIS, June 2: French Socialist Party leader Lionel Jospin took over as prime minister today, saying his new Left-wing government will be in place within the week, after his upset election victory that dealt a humiliating blow to Conservative President Jacques Chirac.

The Gaullist President saw his greatest political gamble backfire when voters yesterday turfed out the Centre-Right government and returned the Left to power.

Chirac had called a snap parliamentary election, 10 months early, to seek a friendly majority for the rest of his seven-year term until 2002.

Instead, he now faces five years of power-sharing or ``cohabitation'' with Jospin, his ideological rival and the man he beat for the presidency in 1995.``The President of the republic offered to appoint me as prime minister. I accepted,'' Jospin told reporters on the steps of the presidential palace after a 55-minute meeting with Chirac. He said he planned to form a government ``quickly, this week''.

Yesterday's result moved European politics further to the Left, a month to the day after a landslide election victory for Britain's Labour party.The French, preoccupied with record unemployment, punished Chirac at the polls for broken promises on jobs and taxes. They spurned his call for a ``new elan'' to prepare for a single European currency from January one, 1999.

The Socialists generally favour the planned single currency, the Euro, but will rely for their parliamentary majority on Communists who oppose it.Jospin has also ruled out further austerity to meet qualifying targets for the Euro, including ceilings on the budget deficit, inflation and public debt.

Bond market analysts said that could mean, at best, a wider group of countries joining a ``softer'' single currency from the start. The Socialists want both Spain and Italy included from the outset.

``We all stand to gain if...Europe no longer means austerity,'' Socialist party spokesman Francois Hollande said in a radio interview. At worst, analysts said, it could mean a delay to the Euro.

Edgar Meister, a board member of Germany's powerful Bundesbank, said the voyage towards Economic and Monetary Union (EMU) may enter ``rougher waters'' in the weeks and months ahead. ``Since yesterday the constellation has been altered so that we might know in the next few weeks, not in 1998, whether the Euro will be a stable currency,'' Meister said.

The Bundesbank is itself embroiled in a row with the Bonn government, which it accuses of cooking the books by revaluing the country's gold reserves to bolster public finances and qualify for EMU.

European Union foreign ministers took a cautious approach to the French election outcome.

The US dollar soared to near four-week peaks against the Mark and French Franc in Europe, buoyed by renewed uncertainty over the Euro. The Paris stock market plunged more than three per cent at one point, though it later bounced back and turned positive as traders were forced to cover short positions.

The Communists quickly started to flex their muscles, saying they would disclose a list of demands as their price for joining a government.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.