France, Germany not happy with G20 draft: Sarkozy

PARIS (Reuters) - French President Nicolas Sarkozy said on Wednesday neither France nor Germany was satisfied with current proposals for an accord at this week's G20 summit and warned that he would not accept any "false compromises."

Leaders from the Group of 20 rich and emerging nations are arriving in London for a summit billed as a watershed in efforts to battle the worst economic downturn since the 1930s.

There is strong pressure for an agreement but divisions have shown up between the United States and Britain on one side and continental Europeans over the balance between extra financial stimulus and the need for regulation.

Sarkozy did not explicitly repeat a threat to walk out of the gathering but said he would not be party to any attempt to sidestep firm proposals for change.

"I will not associate myself with a summit that would end with a communique made of false compromises that would not tackle the issues that concern us," he told Europe 1 radio in an interview.

"Regulation is at the heart of the debate that we are going to be holding during these hours," he said.

Sarkozy, who is due to hold talks with President Barack Obama and co-host with Germany a NATO summit of world leaders later this week, said Paris and Berlin were not happy with the proposals currently on the table.

The two countries have been pressing for more action against tax havens, insisting that countries should be named and shamed if they failed to bow to pressure on ending bank secrecy but he said agreement still appeared some way off.

"As of today, there is no firm agreement in place," he said. "The conversation is going forward, there are projects on the table. As things stand at the moment, these projects do not suit France or Germany," he said.

He said any walkout would be an admission that the meeting had failed to produce an agreement but he said he was hopeful that a deal could be reached.

"The empty chair policy would mark a failure, which would be that of the summit," he said.

"I do not want to think that we will come to that. I had (German Chancellor Angela) Merkel on the telephone again late last night. We are on exactly the same wavelength. We have and we will carry a European view on values which are those of Europe."

(Reporting by Francois Murphy and James Mackenzie; editing by Patrick Graham)