President Nicolas Sarkozy helped cut the ribbon on the AGV, which stands for Automotice Grande Vitesse, or High-Speed Railcar - a bullet-train designed with a cruise speed of up to 360 kilometres per hour.

The TGV's top cruise speed is currently 320 kph.

'We wanted this train because we had understood that the ultra high-speed market was going to evolve,'

Alstom chairman Patrick Kron told some 500 guests gathered at a rail test centre in the Atlantic city of La Rochelle.

'To answer that challenge, we had to expand and modernise our offer,' he said before unveiling the slick black-and-grey prototype, which shunted forwards in a pool of blue light.

The AGV's key innovation is a system of motorised carriages spread along the length of the train, instead of the front and rear only, which constructors say slashes both energy and maintenance costs.

Mr Sarkozy, who as finance minister intervened in 2004 to save the engineering giant Alstom from being broken up, was guest of honour, along with top executives from the French, German, Russian and Italian rail operators.

The president hailed the AGV as proof of the group's 'renewal", saying its success showed he had been right to prop up the French champion.

'We need to entrench a simple message in people's minds: industry is not over, industry is essential for the economy of a rich nation as much as an emerging nation,' Mr Sarkozy said.

Alstom designed the AGV alone, unlike the TGV which was a joint project with the state rail firm SNCF 27 years ago, aiming for a more spacious interior and greater energy-efficiency.

The French manufacturer has already secured a 1.5-billion-euro (S$3.11 billion) export contract with Italy's new rail operator Nuovo Transporto Viaggiatori (NTV), which plans to put 25 trains in circulation from 2011.

Alstom's AGV beat both the Inter-City Express (ICE) of the German company Siemens and the Canadian Bombardier's superfast Zefiro train for the contract.

German newspapers report that Alstom is well-placed to beat Siemens on home ground for an upcoming contract with the state rail operator Deutsche Bahn.

Pride of French engineering, the current-generation TGV is one of the world's fastest rail services, with high-speed lines criss-crossing France and links to London and Brussels.

A supercharged French TGV smashed the world speed record for a train on rails last year, hurtling into the history books at 574.8 kilometres per hour - close to half the speed of sound.

Japan's Shinkansen 'bullet train' and Siemen's ICE train are the other major players in a global fast train market that has been boosted by environmental concerns about the impact of air transport.

The Shinkansen and the ICE currently average about 300kph (185 mph) but a new version of the Japanese train, the Fastech 360Z, is expected to operate at 360kph (225 mph) when it enters service. -- AFP