French Prime Minister Manuel Valls has announced a new cabinet, including Ségolène Royal, the 2007 presidential candidate and one-time partner of President Francois Hollande.

Mr Valls decided on the line-up following a two-hour meeting with Mr Hollande during which they deliberated over key appointments such as the interior and finance ministries.

Ms Royal, an outspoken socialist who ran for president herself in 2007, returns to the frontline of French politics as energy and environment minister.

She and Mr Hollande had four children together and split in 2007 on the eve of the election.

French leftist Arnaud Montebourg, who as industry ministry has long accused the European Union of hurting economic growth with demands for lower public deficits, won new powers as economy minister in the cabinet reshuffle.

His promotion will raise new concerns in EU capitals about France's resolve to stick to deficit targets.

It comes just two days after Mr Hollande hinted that France would seek further time from the EU to get its public finances in shape.

Mr Montebourg will work alongside Michel Sapin, the former labour minister, who replaces Pierre Moscovici as finance minister.

The new government was announced three days after ruling Socialists were trounced in local elections.

Mr Sapin will formally have oversight over France's public finances, which last year showed a deficit at 4.3% of output, well above an EU target of 3%.

However Mr Montebourg's expanded role, which will include oversight on industry and the digital economy, will give him a bigger say on policy than he had before.

The appointments, which were announced in a presidential statement read out on the steps of the Elysee Palace, came after Mr Valls was appointed France's new prime minister yesterday, replacing Jean-Marc Ayrault.

Mr Hollande's Greens coalition partners refused to take part in Mr Valls' government in protest at his socially conservative stances on issues such as immigration, a move that could weaken support for economic reforms in parliament.