UPDATE 1-Sarkozy judge mistook hostage for billionaire -lawyer
(Adds poll, UMP party leadership feud)
* Case concerns diary entry that raised funding suspicion
* Result of interrogation lifts cloud over future
* Many want Sarkozy back as feud plagues conservative party
By Brian Love
PARIS, Nov 23 (Reuters) - A judge investigating Nicolas Sarkozy's campaign funding mistook a Colombian hostage for a billionaire backer of France's right-wing party when he queried a meeting in the ex-president's diary, a lawyer for Sarkozy said.
Sarkozy, who lost power in May, was questioned for 12 hours on Thursday by a judge who is trying to establish whether his election win in 2007 was aided by illegal funding from France's richest woman, 90-year-old Liliane Bettencourt.
Rather than Bettencourt, daughter of the founder of the L'Oreal cosmetics empire, the diary entry referred to Franco-Colombian Ingrid Betancourt, who was held hostage in Colombia for six years and freed in 2007, the lawyer said.
"In the diary box, believe it or not, it's indicated that Nicolas Sarkozy received the Betancourt family," lawyer Thierry Herzog told French radio.
Judge Jean-Michel Gentil decided after the questioning not to open a full-blown inquiry into Sarkozy, who has bowed out of politics but remains a possible candidate for the conservative camp in the next presidential contest in 2017.
Sarkozy's departure has sparked a feud within his UMP party, where two men who faced off in an internal leadership election are exchanging accusations of fraud and sinking in polls.
A BVA poll released on Friday indicated that 73 percent of conservative voters want Sarkozy back in politics.
It pointed to plunges in the popularity of the two men fighting to take his place as leaders of the mainstream right, Francois Fillon and Jean-Francois Cope.
Sarkozy lawyer Herzog said that the ex-president, who categorically denies any wrongdoing, was relieved after Thursday's meeting with the magistrates.
Gentil and two other judges who questioned Sarkozy classified him as a witness, a status in French judicial procedure that signals he is not liable to face trial.
Initial suspicions were fuelled three years ago when a woman who worked as an accountant for the mentally frail Bettencourt, now aged 90, alleged that a large cash withdrawal was earmarked for Sarkozy's campaign.
Liliane Bettencourt's family has long had close connections with the UMP party of Sarkozy, who lost presidential immunity when he left office.
"For him and for me, this affair is an affair that no longer exists," said Herzog.
The Bettencourt affair is not the only cloud on the horizon.
Lawyers are also demanding that Sarkozy, who lost legal immunity when he was voted out of office, explain himself in two other cases. One is about the terms of a submarine sale to Pakistan and another concerns lavish spending on opinion polls by his office when he was president.
While the BVA poll suggested that three in four conservatives want to see Sarkozy back in action, it also showed that 65 percent of French voters more generally do not want him back after he lost the May presidential election to Socialist Francois Hollande. (Reporting By Brian Love; Editing by Myra MacDonald)