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Striking French CGT labour union employees sit near a barricade to block the entrance of the fuel depot of the SFDM company near the oil refinery of Donges, France, May 25, 2016 in protest over proposed new labour laws. REUTERS/Stephane Mahe

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By Ingrid Melander and Michel Rose

PARIS (Reuters) - The stand-off between France's government and a hardline union over labour reforms worsened on Wednesday as the country mobilised strategic oil stocks for the first time in 6 years and employers warned the protests were starting to hurt the economy.

Police broke up a fuel depot blockade with water cannon and staff at France's 19 nuclear plants voted to strike on Thursday, in an escalation which a majority of French fear could disrupt the Euro 2016 football championship.

Ministers insisted that Socialist President Francois Hollande's government would stand firm and ensure fuel supplies, with strategic reserves large enough to last more than three months.

Power industry experts said the nuclear plant strike, called by the militant CGT union leading the worker protests, was unlikely to provoke blackouts due to legal limits on strike action in the nuclear industry and power imports from abroad.

"The CGT does not rule this country," Prime Minister Manuel Valls told lawmakers. "We won't withdraw the (reforms)."

CGT chief Philippe Martinez said his union, one of the biggest in France, would press on with the strikes. "We will carry on," Martinez told France Inter radio.

At stake is a labour market reform to make it easier for firms to hire and fire. The government says it is crucial to fight unemployment stuck at above 10 percent of the workforce. The CGT says it would dismantle protective labour regulation.

Other unions back the latest version of the reforms, which have been watered down by the government. Seven out of 10 French people are in favour of withdrawing the reform to avoid standoffs between the government and unions, an Elabe poll showed.

Both the CGT and the government are digging their heels in with an eye of the month-long Euro football championship due to start on June 10.

A majority of French fear the tournament, operating under high security after last year's Islamist attacks on Paris, will be disrupted by protests and worry about the impact on France's image abroad, a poll showed.

Nearly two-thirds would blame the government for it, the survey by Odoxa pollsters showed.

BATTLE FOR INFLUENCE

As well as embarrassing an already deeply unpopular government, the labour reform dispute has put a spotlight on the battle for influence between France's two largest unions, the CGT and the CFDT, whose refusal to join strike calls could blunt the impact of the industrial action.

Street protests over the law have been going on for weeks but with dwindling turnout. As it failed to convince the government to budge further, the CGT moved on to sectoral strikes such as those targeting refineries.

Total <TOTF.PA>, which operates about a fifth of France's stations, said 348 out of its 2,200 petrol stations were out of stock.

A train strike on Wednesday was having less impact than one last week, with the SNCF rail operator saying 3 out of 4 fast trains and 6 out of 10 regular inter-city train were running. Only 10.6 percent of workers heeded the strike call, it said.

France's main employers group said the protests were starting to have an impact on the economy and could push fragile businesses to bankruptcy.

The standoff comes as signs are emerging that the labour market has at last begun to turn the corner with the number of unemployed people falling by nearly 20,000 in April in a second consecutive monthly decline, the Labour Ministry said in a monthly report.

(Additional reporting by Chine Labbe, Emmanuel Jarry, Bate Felix, Geert de Clercq and Brian Love in Paris, Pierre Savary in Lille; Writing by Ingrid Melander; Editing by Janet Lawrence)

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