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

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PARIS (Reuters) - French conservative presidential candidate Francois Fillon, who is favourite to win this year's election, will lay out on Wednesday his proposals to cut immigration to a "strict minimum" through the use of quotas, an aide said on Tuesday.

Fillon, who is seen beating far-right leader Marine Le Pen if they meet in a runoff in May in the presidential election, will also urge the European Union to tighten its asylum and immigration policy to counter threats from Islamist militants.

Fillon will announce his plans in the Mediterranean city of Nice, where Tunisian-born Mohamed Lahouaiej Bouhlel drove a 19-tonne truck along the beach front last July on the Bastille Day national holiday, killing 86 people who had gathered to watch fireworks.

"Francois Fillon will not go to Nice to proclaim that France should leave the Schengen agreement. He will say that it is necessary to set immigration quotas," the aide said.

The EU's open-border Schengen area has come under heavy strain over the past couple of years as more than a million migrants and refugees, many fleeing conflicts in the Middle East and beyond, have crossed into Europe seeking a better life.

Fillon will also visit on Wednesday the nearby town of Menton, on the Italian border, where arrests of illegal migrants rose in 2016.

According to his manifesto, immigration should depend on France's capacity to take in more people and to integrate them successfully. Fillon wants parliament to set annual immigration quotas based on the employment and housing situation and other social factors.

Fillon also wants to deny social benefits to immigrants who have legally resided in France for less than two years.

Fillon's immigration plans, along with his embrace of free market economic policies, have drawn criticism from rivals on the left who say they will deepen divisions in French society.

Fillon is expected to meet German Chancellor Angela Merkel on Jan. 23 in Berlin, where he will propose strengthening the Schengen agreement by suspending for one year the participation of a member state that is unable to control its external borders.

(Reporting by Sophie Louet; Writing by Bate Felix; Editing by Gareth Jones)

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