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France's Macron resigns in step towards presidency run

French Economy Minister Emmanuel Macron leaves a weekly cabinet meeting at the Elysee Palace in Paris, France, August 22, 2016. REUTERS/Pascal Rossignol

By Jean-Baptiste Vey and Leigh Thomas

PARIS (Reuters) - French Economy Minister Emmanuel Macron resigned on Tuesday, clearing the way for a presidential bid that will further unsettle an already wide-open race.

The 38-year-old former investment banker, one of France's most popular politicians, did not immediately say he would run in the 2017 election but is widely expected to do so, having quit the government and created his own political party.

"Emmanuel Macron ... today handed in to the president of the Republic his resignation from the government to fully devote himself to his political party," Socialist President Francois Hollande's office said in a statement.

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Finance Minister Michel Sapin, a close ally of Hollande, will add the economy ministry to his portfolio. The government's pro-reform line is not expected to change.

A spokeswoman said Macron would not announce a presidential bid on Tuesday. His new party will first conduct a door-to-door campaign to gauge opinion and collect voters' grievances on French politics by the end of September.

"After that we will make proposals, and after that candidacy questions will be dealt with," the spokeswoman said.

Macron's place in the government had become increasingly awkward after he repeatedly criticised left-wing totems like France's 35-hour work week and created his own party in April, casting it as leaning neither left nor right.

A source in Macron's inner circle said the rapidly evolving political situation, in which former president Nicolas Sarkozy and two former Socialist ministers had declared their intention to run for president, had forced the hand of the minister, who the source said had initially planned to resign mid-September.

If confirmed, a Macron bid for the presidency would further harm Hollande's chances of re-election, with polls already suggesting he would be very unlikely to even make it into the run-off round.

Hollande also has challengers from the left, including more hardline Socialists such as former industry minister Arnaud Montebourg and ex-education minister Benoit Hamon.

A Macron bid could also hurt the chances of the man leading the polls on the centre-right, former prime minister Alain Juppe, who would also target centrist voters.

Juppe must first beat Sarkozy in what promises to be a bruising fight at the conservative Les Republicains' primaries in November.

Macron ranks in polls just behind Juppe, but analysts say that popularity may not equal votes.

"He needs to transform his considerable popularity into voting intentions, but it won't be easy because he's not well liked on the left and his popularity on the right would not necessarily translate into votes," said IFOP pollsters' analyst Frederic Dabi.

Macron has won plaudits from economists and business leaders by pushing through a deregulation law cutting red tape for retailers and the legal profession among other areas.

But while at ease on economic issues, he is untested on security in a country where a string of Islamist attacks has made law and order and immigration key vote winners, with Sarkozy vowing to ban the "burkini" full-body swimwear across France if returned to the top job.

Macron said on his Twitter page he would talk to reporters later on Tuesday.

(Additional reporting by Emmanuel Jarry and Elizabeth Pineau; Writing by Ingrid Melander; Editing by Robin Pomeroy)