Shares in French state-controlled Electricite de France SA (EDF.FR) dropped sharply Wednesday after the Green and Socialist parties announced a tentative agreement on a joint plan to reduce the country's long-standing reliance on nuclear energy as part of a joint electoral program for the May 2012 presidential election.

At 1510 GMT, EDF shares were down 4.6% at EUR19.79 while the CAC-40 benchmark index was up 0.1%. Shares in French state-controlled nuclear engineering firm Areva SA (AREVA.FR) were down 0.3% to EUR20.23 on the first trading day after the tentative Socialist-Green pact was announced late Tuesday night.

The market's reaction underscored the French state-controlled power giant's vulnerability to a possible retreat from nuclear power in its home market, which would come on the heels of recent anti-nuclear shifts in some neighboring countries in Europe . Members of the Sarkozy administration, which strongly endorses France 's current level of nuclear power, Wednesday ridiculed the Socialist-Green alliance and predicted it wouldn't resonate with voters.

EDF owns and operates all of France 's 58 nuclear reactors and is currently building another, a 1,600-megawatt reactor--the EPR, or Evolutionary Pressurized Reactor--in Normandy , slated to start commercial production in 2016.

"Until the election has taken place, the stock will remain sensitive to all polls," said a Paris-based trader.

EDF declined comment Wednesday.

The Greens and the Socialist party said that if they came to power, they would cut the country's share of nuclear power in the energy mix from 75% to 50% by 2025 through the gradual closure of 24 reactors. The Greens, which argue that nuclear energy is unsafe and delays a needed transition to renewable energy, are expected to consider the pact this weekend.

The two political parties also said they would shut down France 's oldest nuclear plant immediately, if socialist candidate Francois Hollande is elected president in May. As part of the deal, the Green party will get to nominate candidates for the next parliamentary elections, which traditionally follow the presidential poll.

The Socialists, though, didn't agree to close down the third-generation EPR Flamanville reactor being built in northern France .

French Energy Minister Eric Besson said the plan unveiled by the Socialists and Greens would be "a pure catastrophe" if implemented, leading to higher power prices on industrial energy consumers and boosting carbon dioxide emissions.

"On an industrial level, it's not shooting yourself in the foot, but literally an amputation that's being discussed," he said.

"The French people will have to foot the bill, which will be expensive in terms of energy cost, jobs and energy independence," Budget Minister Valerie Pecresse said on Europe 1 radio earlier Wednesday. "Our trade balance depends greatly on our energy self-sufficiency," she added.

Environment Minister Nathalie Kosciuzko Morizet denounced the political deal between the two opposition parties, saying that "exchanging district endorsements with nuclear plants doesn't make sense."

France is the world's second largest nuclear operator after the U.S., with 58 reactors and one additional currently being built, meaning nuclear represents around 75% of the country's energy mix, a heritage from the 1970s when France embraced the atom to reduce its exposure to the oil and gas producers and saw it a way to strengthen its prized energy independency.

Until the Fukushima accident in March, the very use of nuclear as France 's main electricity source wasn't seriously called into question. Even the Three-Mile Island and the Chernobyl catastrophes didn't trigger any reaction in this land of pragmatic consumers, who'd rather pay cheap power than get lower taxes: French electricity is 40% cheaper than elsewhere in Europe .

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