UPDATE 5-Sarkozy, Hollande trade barbs in TV debate
* Angry Sarkozy accuses Socialist rival of lying
* Duel seen as conservative leader's last hope of catching up
* Hollande leads runoff polls, Le Pen won't endorse Sarkozy (Adds more debate quotes on economy, Europe)
By Catherine Bremer and Paul Taylor
PARIS, May 2 (Reuters) - French President Nicolas Sarkozy and Socialist challenger Francois Hollande clashed repeatedly in their only televised debate on Wednesday, wi th the co nservative incumbent so unding angry and on the defensive fo ur days before the vote.
Trailing Hollande in opinion polls by six to 10 points before Sunday's decisive runoff despite an energetic campaign and a lurch to the right to appeal to far-right voters, Sarkozy said he wanted the prime-time debate to be a "moment of truth".
Hollande was more confident and relaxed in the early exchanges, saying he aimed to be "the president of justice", "the president of revival" and "the president of unity".
He said Sarkozy, in office for the last five years, had divided the French people for too long and was using the global economic crisis as an excuse for broken promises. "With you it's very simple: it's never your fault," Hollande said.
Sarkozy, fighting for his political life, repeatedly accused his opponent of lying about economic figures and reeled off reams of statistics in an attempt to unbalance his rival.
"Mr Hollande. When you lie so shamelessly, do I have to accept it?" he asked when his opponent said the president was always happy with his record.
"It's a lie. It's a lie. It's a lie," Sarkozy said.
"The example I want to follow is Germany and not Spain or Greece," the president said, d eclaring that he and German Chancellor Angela Merkel had saved Greece from an economic wipeout and avoided the collapse of the euro currency.
"Europe has got over it," Sarkozy said of the crisis .
Hollande shot back: "Europe has not got over it. Europe is today facing a possible resurgence of the crisis with generalised austerity, and that's what I don't want."
He said people around Europe were watching the French election in hope that it would change the continent's direction towards growth.
The duel was carried live on channels that reach roughly half France's 44.5 million voters. T he streets of Paris were unusually deserted with many people staying home to watch.
Sarkozy needed to win a decisive victory in the debate to have any chance of catching up in the last four days but neither candidate landed a knockout blow.
The conservative head of state and his centre-left rival have duelled at a distance for months, with Sarkozy accusing Hollande of being incompetent and a liar, and Hollande branding the incumbent a "failed president" and "a nasty piece of work".
When they finally met in a television studio, the exchanges were just as barbed.
Sarkozy suffered a setback on Tuesday when far-right leader Marine Le Pen - whose 17.9 percent score was the surprise of the first round - refused to endorse him. She vowed at a Paris rally to cast a blank vote and told her supporters to make their own choice, focusing most of her attacks on Sarkozy.
The issue of how to deal with the anti-immigration crusader and her supporters continues to torment Sarkozy's UMP party. Senior party leaders rebuked Defence Minister Gerard Longuet for telling an extreme-right weekly that Le Pen could be someone the mainstream right could talk to.
The candidates also tangled on i mmigration , with Sarkozy attacking Hollande's proposal to give long-term, non-European foreign residents the right to vote in local elections.
A TNS Sofres poll published on Wednesday found 37 percent of voters agreed with the National Front's positions, the highest level since 1984. Just over half said France had too many immigrants.
Sarkozy, being punished for rife unemployment and a brash manner, is the most unpopular president to run for re-election and the first in recent history to lose a first-round vote.
HOLLANDE LEAD TIGHTENS
He began campaigning weeks after the more plodding Hollande, vowing to boost industrial competitiveness, hold referendums on contentious policies, crack down on tax exiles and make the unemployed retrain as a condition for receiving benefits.
More recently, seeking to court the 6.4 million National Front voters, he has vowed to cut immigration and threatened to pull out of Europe's Schengen zone of passport-free travel unless the European Union's external borders are strengthened.
"Sarkozy needs to swing 1.5 million people to his side. It won't be easy, but that doesn't mean it's impossible," Bernard Sananes, head of the CSA polling institute, told BFM TV.
Recent polls show Hollande with a slightly tighter but still comfortable lead. A BVA survey on Wednesday put the gap 1 point narrower at 7 points, with the rivals at 53.5 and 46.5 percent.
Sarkozy, a formidable political brawler, was convinced he could swing things in his favour by portraying Hollande as lacking experience and economic credibility. He said Hollande's tax-and-spend plans would sow economic catastrophe.
The final days of the race have been clouded by mudslinging and sleaze allegations, with Sarkozy filing a lawsuit against a news website that alleged Muammar Gaddafi's government had sought to fund his 2007 campaign.
At May Day street marches, some Sarkozy opponents made "Pinocchio" faces out of posters of the president by poking their fingers through the centre to make fake long noses.
His supporters were rooting for him on Wednesday, however. "He's going to bring Hollande to his knees," Jean-Pierre LeGrand, 60, told Reuters at Sarkozy's May Day rally.
The Socialists have sought to capitalise on Sarkozy's unpopularity and a reputation as a "president of the rich".
"It's a clash of styles: their personalities are very different," Hollande's campaign manager Pierre Moscovici said.
Substance was also on the table, with Sarkozy picking on Hollande's plans to remove tax breaks on overtime, raise taxes on large companies and tax earnings over 1 million euros ($1.32 million) at 75 percent.
The only debate considered to have swung a French election, albeit a much tighter one, was in 1974, when Valery Giscard d'Estaing emerged stronger for hitting Socialist Francois Mitterrand with the snub: "You do not have the monopoly of the heart." But most political scientists and pollsters say the debates have only confirmed voters in their established views.
Twenty TV cameras scrutinised the two rivals from every angle as they sat 2.5 metres (8 feet) apart across a table, twin digital clocks ticking to ensure each had equal speaking time.
The two sides had agreed on every logistical detail, down to the temperature of the TV studio - between 19 and 20 degrees Celsius (66 to 68 Fahrenheit) and chairs adjustable for height.($1 = 0.7603 euros) (Additional reporting by Daniel Flynn, Alexandria Sage, John Irish, Pauline Mevel, Emmanuel Jarry and Elizabeth Pineau; Editing by Alastair Macdonald)