Paris, Tuesday.

FRANCE and Germany closed ranks today to belittle the impact of the

collapse of the Exchange Rate Mechanism and declare they were still on

course for European Monetary Union.

After regular Franco-German economic talks, both governments went out

of their way to stress the warmth of co-operation and minimise the

setback to European integration from the loosening of links among

European currencies.

French Economy Minister Edmond Alphandery denied reports of feuding

between the European Community's two central partners as a wave of

speculation overwhelmed the exchange-rate grid.

''I want to lay to rest all these rumours about the so-called

deterioration in Franco-German relations . . . I can testify that during

this period of tension on the markets, the Franco-German couple once

again proved its solidity,'' he said.

At a joint news conference, Alphandery and German Finance Minister

Theo Waigel chose the same word -- ''flawless'' -- to describe their

co-operation during the monetary crisis which shook the European

Monetary System.

Alphandery told a news conference France remained committed to a

stable franc and low inflation.

Bundesbank President Helmut Schlesinger also minimised the impact of

the weekend decision to widen to 30% the bands within which EMS

currencies may fluctuate against each other.

Other EMS currencies had been devalued by a mere 1.5% on average

against the mark, and the German unit had gained only 0.7% against

leading world currencies since then, he said.

Talk of currencies having to use the entire 15% margin they had been

given on either side of a pivotal rate had not come true, a jovial

Schlesinger said before apologising in French for having to catch an

early plane home.

The Ministers and central bankers betrayed not the slightest doubt

that a single European currency, the centrepiece of the Maastricht

treaty on European Union, would go ahead as planned by 1999 -- despite

comments by Prime Minister John Major and many economists that it now

appeared totally unrealistic.

Waigel said last week's events showed the criteria for economic

convergence among EC states were still valid and should even be

reinforced.

But others took a less sanguine view of the results of the monetary

crisis. Former French finance minister Michel Sapin said the decision to

loosen the links between EMS currencies was ''quite simply bad for

France and bad for Europe''.

Sapin, who fended off two previous waves of speculation before being

voted out of office in March, said Germany's responsibility for the

monetary crisis was clear. He accused the Bundesbank of unsettling

markets.The French stock market showed its disappointment that the

loosening of links among European currencies had not led France to cut

interest rates immediately, giving up some of the gains it made

yesterday.

The Bundesbank shaved its key money market rate to 6.80% today while

France left short-term rates unchanged, helping the franc to rebound to

3.4800 against the Deutschmark after falling as far as 3.5305 yesterday.