* Socialist victory comes at crucial time for Europe
* Hollande wins 51.7 pct to 48.3 pct victory over Sarkozy
* Hollande urges growth measures to temper austerity
* Greek election bombshell overshadows French celebration
By Catherine Bremer
PARIS, May 7 A victorious Francois Hollande
faces a short honeymoon after his election as France's first
left-wing president in 17 years, with financial markets eager
for clear signals on his policies and how hard he plans to push
back against German-led austerity.
The moderate Socialist beat conservative Nicolas Sarkozy
with 51.7 percent of Sunday's runoff vote after a bruising
campaign dominated by the same anger over economic crisis that
has felled 10 other European leaders since late 2009.
While jubilant left-wing voters partied into the early hours
of Monday in central Paris, Hollande admitted that for him, the
festivities would have to be short-lived.
"There is a lot of joy and pride but also apprehension at
taking on this responsibility at a difficult time for the
country and for Europe," he said.
After delivering a victory speech in his rural base of Tulle
in central France, he flew to Paris and addressed tens of
thousands of supporters in historic Bastille square.
The new president is expected to be sworn in on May 15. As
fears about the euro zone's debt crisis resurface following an
inconclusive election in Greece, Hollande will travel to Berlin
shortly thereafter to challenge Germany's focus on austerity
policies and press new ideas for stimulating growth.
"In every capital, beyond the heads of state and government,
there are people who have found hope thanks to us, who are
looking to us and want to put an end to austerity," he declared.
The left reclaimed Bastille square where revellers danced
the night away in 1981 when Francois Mitterrand became the
Socialist Party's first directly elected president. Three
decades later, a new generation of left-wing voters waved red
flags and some carried roses, the party emblem.
Hollande is expected to include some trusted old hands in
his government like Mitterrand's former prime minister Laurent
Fabius but add many young politicians and women.
His economic team, led by centre-left former finance
minister Michel Sapin, includes politicians, industry leaders
and public officials seen as market-friendly.
Hollande must quickly outline his domestic plans, likely to
centre around a major tax reform, and revise over-optimistic
growth targets which threaten France's deficit-cutting goals.
His plans to tweak a reform that raised the retirement age
to 62 and increase the minimum wage are also rattling investors
who fear France could drift away from the club of sound northern
European borrowers and towards the debt-laden periphery.
"Hollande's victory has already been priced in by markets,
however his promises made during the campaign have not been
priced in, so there is risk on the downside if he stands his
ground when he announces a first set of measures," said fund
manager Christian Jimenez at Diamant Bleu Gestion in Paris.
"There's a clear need to boost economic growth across
Europe, but the debate is on how to achieve that without
LEFT WELL PLACED FOR PARLIAMENT
Sarkozy, punished for his failure to rein in 10-percent
unemployment and for his brash personal style, conceded defeat
within 20 minutes of polls closing on Sunday, telling supporters
he had wished Hollande good luck in such trying times.
"I bear the full responsibility for this defeat," Sarkozy
said, indicating he would withdraw from frontline politics.
In Greece, mainstream parties were hammered in a
parliamentary election that seemed set to leave supporters of an
IMF/EU bailout without a majority, raising doubts about Athens'
future in the euro zone.
The euro fell in early trading in Asia on the Greek
shock, with anti-austerity parties of the radical left and right
winning almost half the votes.
Hollande's clear win should give the self-styled "Mr Normal"
the momentum to press German Chancellor Angela Merkel to accept
a policy shift towards fostering growth in Europe to balance the
austerity that has fuelled anger across southern Europe.
Merkel, who had openly favoured fellow conservative Sarkozy,
telephoned to congratulate Hollande and invited him to Berlin
after his inauguration. The vote ended the "Merkozy" duo that
led Europe through crisis and ushers in an untested partnership.
German Foreign Minister Guido Westerwelle said: "We will now
work together on a growth pact for Europe, that delivers more
growth through more competitiveness."
Opinion polls taken on Sunday showed the left strongly
placed to win a majority in parliamentary elections next month,
especially since the anti-immigration National Front is set to
split the right-wing vote and hurt Sarkozy's UMP party.
If they win that two-round election on June 10 and 17, the
Socialists would hold more levers of power than ever before,
with the presidency, both houses of parliament, nearly all
regions, and two-thirds of French towns in their hands.
Hollande led the presidential race from start to finish,
outlining a comprehensive programme in January based on raising
taxes, especially on high earners, to finance spending
priorities and rein in the public deficit to zero by 2017.
He benefited from public distaste for the incumbent's
abrasive style as well as anger about economic gloom that has
swept aside leaders from Dublin to Lisbon.
Sarkozy launched his campaign late and swerved hard to the
right between the two rounds of voting as he tried to win back
low-income voters who ditched him for the radical left and the
far right on the first ballot.
He barely dented Hollande's lead, however, and also failed
to land a knockout punch in their only television debate.
In two further blows in the last days of the race, far-right
leader Marine Le Pen, who won 17.9 percent in the first round,
and centrist Francois Bayrou, who polled 9.1 percent, refused to
endorse the conservative president.
Sarkozy allies consoled themselves that the margin of defeat
could have been worse, preserving their parliamentary election
hopes. "People were talking about an anti-Sarkozy tsunami,"
Foreign Minister Alain Juppe said. "That's not what happened."