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* Scores of shops open illegally each Sunday in Paris
* Proponents say Sunday trading boosts jobs, revenues
* Opponents say it hurts small shops and quality of life
By Natalie Huet
PARIS, July 30 (Reuters) - Every Sunday in Paris, crowds of tourists clamber up the hill of Montmartre towards the whitewashed Sacre-Coeur Basilica, pausing by the clothing and gift stores that dot its cobbled streets.
Under France's Byzantine rules on Sunday trading, those at the top of the hill are in a designated tourist area and so can open, but those at the bottom cannot, and risk a fine of 6,000 euros ($8,000) if they do.
"It's absurd," said Sylvie Fourmond, head of a grouping of 180 "off-zone" shops around the Moulin Rouge end of Montmartre that are increasingly defying the law on Sundays.
"To get to the top of the hill tourists don't come by helicopter with parachutes. They walk up our streets and peer into our windows," she said.
The battle over Sunday trading in this neighbourhood - once home to artists including Pablo Picasso and Salvador Dali - is part of a broader fight in France between the champions of deregulation and those defending a deep-rooted social model that treasures leisure time.
The unions that fiercely guard France's 35-hour working week and the churches of this mostly Catholic country oppose Sunday trading. But as recession bites, public attitudes are shifting.
A survey by pollster Ipsos last November showed 63 percent of the French favoured looser Sunday shopping rules. Several hundred hardware store workers even took to the streets in May demanding the right to work on Sunday and chanting "Yes Week-End" in a play on U.S. President Barack Obama's "Yes We Can" campaign slogan.
Across Europe there is a diverse patchwork of Sunday trading laws, with Britain pushing ahead with a broad loosening of rules in 1994, while Germany and Austria still mostly prohibit Sunday opening. A number of recession-hit countries have recently softened their stance, including staunchly Catholic Italy last year and Greece only this month.
In France, backers of Sunday shopping say it would boost jobs and wages at a time when unemployment has surged above 10 percent and economic growth is close to zero.
But opponents say Sunday work usually creates low-paid, part-time labour and that extending opening hours would inflate commercial rents, threatening the existence of the small shops that add to the charm of Paris and other French cities.
"Sunday rest is central to the way society works in France," said Eric Scherrer of the French Confederation of Christian Workers. "We're defending a social achievement."
Shopping has its achievements, too; France's retail sector employs 1.7 million, and consumer spending has long been one of the drivers of economic growth. French hypermarkets were trailblazers for the world in the early 1960s.
Sunday has been enshrined in law as a day of rest in France since 1906, but myriad clauses exempt categories such as fishmongers, florists or the self-employed. Furniture and gardening stores can open, but home improvement stores cannot.
The rules for tourist areas, which are defined by local authorities, only add to the confusion.
The historic Galeries Lafayette and Printemps department stores in central Paris attract 12 million tourists a year - nearly twice as many as the Eiffel Tower - and rely on tourists for around 40 percent of their revenues. But they are not part of any tourist zone.
So, every Sunday, a man guarding padlocked doors at the Galeries Lafayette lets delivery men in but turns away bemused tourists.
"We were hoping to go shopping, so my wife is disappointed. We won't be able to come back because we have other visits planned for the week," said Simon Yim, a South Korean father of two, as he unfolded a map of Paris to find an alternative plan.
Claude Boulle, head of the UCV federation, which represents department stores, says the current state of affairs is disastrous for the sector and for the French economy.
"It projects a terrible image. The money that tourists won't be spending in France will be spent elsewhere," Boulle said.
A 2007 study by the Council of Economic Analysis, an advisory body that reports to the prime minister, recommended loosening Sunday trading rules, noting that similar moves in the United States, Canada and the Netherlands had created 3 to 10 percent more jobs in retail, particularly benefiting the young.
A 2009 law under conservative ex-president Nicolas Sarkozy slightly loosened Sunday trading rules and gave mayors the power to extend Sunday shopping zones.
The current Labour Minister Michel Sapin has said the current situation is "appallingly complicated" but he has no wish to nibble away at the restrictions. That means any movement is likely to come from the mayors, who have so far shown limited enthusiasm across the political spectrum.
Paris Socialist mayor Bertrand Delanoe is among those who have refused to extend the zones. The issue will be at the heart of next March's mayoral election, and some argue Paris's very attractiveness as a tourist venue is at stake.
With 83 million tourists last year, France is the world's most visited country, but a recent study by credit card company MasterCard found that Paris - once the world's top tourist city - will draw fewer foreign tourists this year and could soon be overtaken by newly popular destinations like Istanbul.
Conservative UMP candidate for mayor Nathalie Kosciusko-Morizet wants to free up Sunday shopping to win back tourists she says might otherwise be drawn to cities like London.
Her Socialist rival Anne Hidalgo says she is ready to review the authorised zones to reflect new shopping habits, but that Sunday should still remain a day of rest dedicated to family time, leisure and charity work. Her far-left allies have warned they could run against her if she reneges on this principle.
For now, the battle is being fought in the courts.
Patrolling shops on Sundays and collecting receipts and other evidence of illegal trading, trade unionists have snared over 100 stores in Paris since 2010, bringing them before a judge to be fined.
But when the unions got over 30 hardware stores in the Paris region to shut down on Sundays, a thousand workers and managers took to the streets, arguing that Sunday accounted for up to a fifth of revenues that cannot be recouped during weekdays.
Gerald Fillon, spokesman for the workers of DIY stores Castorama and Leroy-Merlin, said 7,000 workers were hit by the closures - a fifth of whom are students on weekend contracts - and that each Sunday gave them an extra 100 euros in earnings.
"It brings revenues to the company and bonuses to staff, so everyone is happy. It should be up to workers and their families to decide what they want to do with their Sundays," he said.
But Ian Brossat, head of left-wing Front de Gauche at the Paris council, said the issue went much deeper.
"It's really a philosophical question," said Brossat.
"Do we see shopping as the be-all and end-all of humanity, or do we think Sunday can be devoted to other activities?"