Hollande says France has taken necessary measures on deficit

BRUSSELS (Reuters) - France considers that it has done what is necessary to bring its deficit under control and hopes to benefit from flexibility from the European Commission in talks over the country's 2015 budget, President Francois Hollande said.

"We consider that we have done what we had to do: continue to reduce the structural deficit, save 21 billion euros, conduct very significant structural reforms, strengthen our economy," he told a news conference after a meeting of euro zone leaders.

Speaking minutes before data showed unemployment reached a fresh record high in France in September, Mr Hollande said the euro zone's second-largest economy needed some margin of manoeuvre in order to boost growth and employment.

"France wants to preserve all the conditions for growth while respecting the (EU) treaties, respecting them with all the flexibility they allow," he said after the Brussels meeting.

EU leaders agreed that growth in the bloc was too low and that there was a risk of stagnation, Mr Hollande added.

France's most unpopular president in polling history is in the midst of tough negotiations with the European Commission over its budget plan for 2015, which breaks a promise to finally bring the deficit below an EU cap of 3 per cent of GDP.

He said Paris would reply to Brussels' concerns by the end of the week and hoped the EU executive would be convinced and not take the procedure any further.

The Commission has until Wednesday to decide whether to reject France's budget. The increase in unemployment added to bad news for France after a survey showed on Thursday that the business climate deteriorated in October to an eight-month low.

The French government had been counting on a pick-up in business activity in the second half but has cut its 2014 economic growth estimate to 0.4 percent from 1.0 percent previously after the economy stagnated in the first half.