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French unemployment rises

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PARIS, France (Reuters) -- France's jobless rate climbed to 9.7 percent in September, its highest level since April 2000, the Labour Ministry said on Friday, dampening hopes that France's beleaguered economy is close to turning the corner.

The number of people officially registered as out of work on the basis of International Labour Organisation measurements rose by 1.4 percent to 2,639,000, the ministry said in a statement.

The figure -- well above the euro zone unemployment rate of 8.8 percent -- was gloomier than expected. Economists polled by Reuters had forecast no change from the 9.6 percent unemployment rate registered in July and August.

With the latest economic data indicating France will escape the recession that ensnared Germany and Italy early this year, French Prime Minister Jean-Pierre Raffarin said a week ago that he saw growth improving and unemployment receding in 2004.

Yet economists polled by Reuters this month forecast unemployment staying stubbornly high next year, at 9.8 percent, and the European Commission predicts France's jobless rate will rise to 9.7 percent in 2004 after averaging 9.4 percent in 2003.

The recent surge in the jobless rate, which the previous government battled to bring down into single figures and to a low of 8.6 percent in early 2001, is a worry for the euro zone as high unemployment tends to have a knock on effect on consumer spending and growth.

France, Germany and Italy together account for around three-quarters of the 12-member euro zone's economic output.

Along with Germany, France is tackling reforms aimed at stimulating employment, which is set to stagnate in coming decades due to a low birth rate, an ageing population and immigration rates that are lower than in the United States.

Raffarin's centre-right government, elected in mid-2002, has included a three percent income tax cut in its 2004 budget and is working to ease payroll taxes on employers in a bid to boost growth and create jobs.

The International Monetary Fund said on Wednesday it saw the French economy staging a tentative recovery in the final months of this year, after bordering on recession in the first half.

Yet many of the job cuts announced by companies hurt by the sluggish demand of recent months are still to come.

Hundreds of people demonstrated in the northern French town of Rennes this week over job cuts in the technology sector, with the upcoming closure of an STMicroelectronics semiconductor plant and planned staff cuts at consumer electronics firms Thomson and Philips.

French specialty chemicals maker Rhodia is also closing a number of factories under a sweeping restructuring.

Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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