* France welcomes creation of Syrian military council
* Not ready to arm rebels, suspicions on rebel group a "problem"
MARRAKECH, Morocco Dec 12 France is not yet ready to supply weapons to Syrian insurgents fighting to oust President Bashar al-Assad despite the setting up of a new rebel military council, Foreign Minister Laurent Fabius said on Wednesday.
"For now we have decided not to move on this," Fabius told reporters before a meeting of 130 "Friends of Syria" nations in Morocco. "We shall see in the coming months."
World powers excluding Russia and China have recognised Syria's new opposition coalition as the legitimate representative of the Syrian people, according to a draft declaration. But feelings about arming the rebels are mixed.
Many Western powers are reticent about sending weapons because they believe that some rebel groups, notably the al-Nusra Front, have links to al Qaeda and will seek to impose Islamic law if they succeed in toppling Assad.
Fabius, whose government was the first to recognise the Syrian opposition, welcomed the creation of a military council as helping to coordinate rebel factions' military operations.
But suspicions regarding al-Nusra Front, branded a terrorist organisation by the United States, were a "problem" which meant that France and Britain had no intention of reviewing a three-month extension of an arms embargo on Syria, he said.
"For now we are not moving)", he said. "There is no question of putting jihadis into this mechanism and this will be discussed more and more now that Nusra has been added to the list," he said.
Suspicions regarding al Qaeda links to some rebel groups had prompted French intelligence services to investigate how the groups were being financed, Fabius said.
"The main difficulty is to embolden the resistance and acclerate Assad's fall without destroying existing institutions. We don't want to go down the Iraq path," he said.
DIARY-Emerging Markets Economic Events to April 28
--------------------------------------------------------------- MONDAY, MARCH 27 SYDNEY - RBA Deputy Governor Guy Debelle speaks at forex conference in Sydney - 2200 GMT. NEW DELHI - Global Business Summit (to March 28). TUESDAY, MARCH 28 SYDNEY - Reserve Bank of Australia Deputy Governor Guy Debelle to speak at the FX Week Australia conference - 2300 GMT. BUDAPEST - Hungarian Central Bank to discuss the final version of its inflation report. JOHANNESBURG - South African Reserve Bank star