French President Francois Hollande's government has taken a 30% pay cut.

Paris - French President Francois Hollande named a government dominated by moderate left-wingers on Wednesday after Socialist Party boss Martine Aubry, overlooked for the post of prime minister, said she no longer wanted to be part of the new cabinet.

Hollande, sworn in a day earlier as France's first Socialist president in 17 years, named Pierre Moscovici as finance minister and Laurent Fabius as foreign minister, key posts under prime minister Jean-Marc Ayrault, a social democrat like them.

Moscovici takes charge of a stagnant economy lumbered with a jobless rate of almost 10 percent and the challenge of cutting heavy debts as Hollande launches his campaign against excessive austerity in Europe, a region struggling with a financial market crisis for more than two years now.

The new lineup, which could change again after parliamentary elections come to a close on June 17, is set to meet for a first time on Thursday before Hollande heads to summits of the G8 group of wealthy countries, and another one for Nato, in the United States.

Aubry, who last year lost a contest against Hollande to run for president on the Socialist ticket, made it clear she would stay away rather than settle for a consolation post - removing an experienced former minister with a reputation as a more fist-thumping left-winger from the team.

Aubry, daughter of former European Commission chief Jacques Delors and architect of France's 35-hour week as labour minister in the last left-wing government of 1997-2002, told Le Monde newspaper:

“I talked with Francois Hollande. He said he had settled for Jean-Marc Ayrault. We agreed that under this configuration my presence in the government made little sense.”

Ayrault, a veteran social democrat who, like Hollande, has never been a minister, will head up a team that mixes a number of old hands and new blood.

Manuel Valls, 49 and the closest thing his party has to a right-winger, was named interior minister.

Najat Vallaud Belkacem, a 34-year-old woman who was one of Hollande's campaign spokespeople team, was named government spokeswoman. She was one of several women recruited to a cabinet Hollande said should comprise both sexes in equal number.

Moscovici, a graduate of the elite ENA civil service school who was Hollande's presidential campaign chief, initially had been expected to get a post other than finance. The 54-year-old is an English speaker who served as a junior European affairs minister in a previous Socialist-led coalition a decade ago.

He wound up taking a key job that was long expected to go to Michel Sapin, one of Hollande's closest long-time friends and a figure who believes blanket austerity risks plunging the euro zone into deep recession.

Sapin became labour minister while Arnaud Montebourg, an outspoken lawyer and member of parliament who has made a name for himself as a vociferous critic of globalisation, was put in charge of industrial revival.

Fabius, the new face of foreign policy, was prime minister at just 37 in 1984 under the late Socialist President Francois Mitterrand and served as finance minister for ex-Prime Minister Lionel Jospin in 2000-2002.

He has been more of an enemy than friend of Hollande in the past. Fabius, 65, treated Hollande with disdain when the two men clashed over Europe in 2005. Fabius campaigned for a “No” vote in a referendum on a European Constitutional treaty that Hollande, then Socialist Party leader, supported.

The changeover from a conservative administration does not appear to have rattled markets for now, despite Hollande's vow to plead against excessive austerity in debt-stricken Europe.

Demand was solid on Wednesday at a first bond auction since Hollande took office, with the yield on the benchmark five-year bond hitting a record low of 1.72 percent as political turmoil in Greece drove investors towards the safe haven of French debt.

Hollande had been expected to find a heavyweight job for Aubry both because of her experience and the need to hold together a historically fractious party.

Right-wingers from former president Nicolas Sarkozy's UMP party seized on Aubry's exclusion to say the Socialist show on unity behind Hollande was a charade that voters should not fall for in the parliamentary elections, which take place in two rounds on June 10 and 17.

The working assumption is that France's 46-million voters should give the left control of parliament on the heels of Hollande's presidential victory. - Reuters