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Francois Fillon, member of Les Republicains political party and 2017 presidential candidate of the French centre-right, presents his New Year wishes at a news conference at his campaign headquarters in Paris, France, January 10, 2017. REUTERS/Philippe Wojazer


PARIS (Reuters) - Conservative French presidential front-runner Francois Fillon urged Europe in an interview published on Sunday to boost its defense capacities with a pooled fund to finance foreign operations.

While the NATO alliance was in his view not "obsolete" as U.S. President Donald Trump has said, Europe nonetheless needed to build up its own capacities, Fillon said in a interview with French daily Le Monde and German newspaper Frankfurter Allgemeine Zeitung.

"I am not calling for an integrated European defense capacity, but a European defense alliance," he said in the interview released on the eve of a trip to Berlin.

"We need to pool our means, build a European defense industry and set up a fund that pools and funds spending on foreign operations," he said, adding that defense spending should not be excluded from EU deficit rules.

Fillon, who is scheduled to meet German Chancellor Angela Merkel as well as her finance and defense ministers, is due to sketch out his vision for Europe during his German trip.

Polls put Fillon, a former prime minister under ex-president Nicolas Sarkozy, in the lead to win a May 7 run-off vote in France's presidential election, though his lead over far right leader Marin Le Pen and independent centrist Emmanuel Macron has been narrowing.

Fillon, who has in the past been praised by Russian President Vladimir Putin, said that improved European relations with Russia hinged on Moscow's respect for the February 2015 Minsk peace agreement on Ukraine, which could in turn open the door in the future to a "new economic partnership".

With Europe not a priority for the Trump administration, Fillon also renewed a call for the euro zone to shore up its institutions and make the euro an international reserve currency as a counterweight to the dollar.

The euro zone needed to jointly steer economic policy at the highest level with regular meetings of its leaders and a focus on aligning corporate tax policy, he said.

With a pro-business focus on cutting public spending and making French companies more competitive, Fillon is generally seen as an ally by fellow conservative Merkel.

Fillon sought to pre-empt fears he may let the French public budget deficit deteriorate while he reforms the economy by saying that he aimed to keep the deficit as close as possible to 3 percent of economic output next year.

His program had indicated that the deficit could be as wide as 4.5 percent in 2018.

(Reporting by Leigh Thomas; Editing by Greg Mahlich)

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