Embattled French PM: I Won't Quit Over Labor Law Crisis

Unions have threatened more mass protests unless the reform is dropped by the end of next week, while wildcat student protests continued to block road and rail traffic, as well as access to factories, a port and an airport.

Asked at a press conference if he intended to stand down, Villepin replied: "The president of the republic has entrusted me with a mission and I shall conduct this mission to its conclusion."

"It is time to put this crisis behind us, to restore calm and unity to the country," he added. "The immediate priority ... is naturally appeasement."

Villepin's authority has been badly undermined in the battle over the First Employment Contract (CPE), which President Jacques Chirac effectively suspended at the weekend, asking for a new law to be drawn up after talks with unions.

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Responsibility for the negotiations has been handed to Villepin's powerful rival, ruling UMP party chief and Interior Minister Nicolas Sarkozy, and a recent poll showed 45 percent of the public think the prime minister should step down.

Villepin urged conciliation to end the two-month crisis after protests drew more than a million people -- three million, unions said -- into the streets for the second time in eight days on Tuesday.

He called on unions -- holding a second day of talks with the ruling Union for a Popular Movement (UMP) -- to "recognize that flexibility is necessary in order to provide employment for all."

"Let us not aim for a zero-risk society, which would be an immobile one, but rather for a society of managed risk," Villepin said, stressing that fighting unemployment remained his government's top priority.

He announced plans to strengthen the links between business and universities to improve graduate job prospects, as well as improve worker protection and fight poverty and exclusion -- seen as responsible for France's suburban riots last year.

A catalogue of failures to listen and to act

Conceived as a tool against youth unemployment which runs at 22 percent in France, the CPE is a contract for under 26-year-olds that can be terminated by the employer without explanation during a two-year trial period.

It has provoked a massive backlash from unions and students, with Villepin accused of trampling on hard-won labor rights.

More than 3,500 people have been arrested and hundreds of riot police injured in the sometimes violent protests.

Chirac last week offered a compromise to end the crisis -- one of the worst in his 11-year presidency -- by ratifying the measure, but promising a new law to amend its most contested provisions.

But unions, backed by the main opposition Socialist party, have demanded the CPE be abrogated entirely by April 17, the start of parliament's spring recess.

Unions want CPE dumped by parliament's spring recess

The UMP has been holding a series of meetings with unions and student groups, the MEDEF employers' association and the CGPME small business federation, to hammer out an accord, with discussions due to wrap up on Friday.

Finance Minister Thierry Breton said he was concerned the protests were harming France's image abroad, although he said they had so far had no impact on the economy.

Meanwhile, wildcat student protests continued across the country, with hundreds of demonstrators blocking a key access road to Paris' Orly airport, and others invading tracks at two main Paris train stations.

Clashes broke out with police after crowds of several hundred students tried to break onto the capital's ring-road.

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In the southwest city of Toulouse, two students were injured when police moved in to clear tracks at the city's railway station. Demonstrators also blocked access to two factories belonging to the aircraft manufacturer Airbus near the city.

Roadblocks paralyzed traffic on the highway linking Lyon with Marseille on the Mediterranean coast, with similar roadblocks near the western cities of Nantes, Rennes and Lorient, Limoges in central France and Nancy in the east.