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French President Nicolas Sarkozy, left, shakes hands with Mahmoud Jibril, right, and Ali Al-Esawi, representatives of the newly formed council based in the eastern Libyan city of Benghazi, after a meeting at the Elysee Palace, in Paris, Thursday, March 10, 2011. France has formally recognized the Libyan opposition's Interim Governing Council and plans to exchange ambassadors with the newly formed body, the president's office said Thursday. -AP Photo

BRUSSELS: France blazed a diplomatic trail as it recognized a newly formed Libyan opposition group Thursday, drawing the ire of other European nations for stepping out on its own even as the situation in Libya remained unclear.

French President Nicolas Sarkozy shook hands with two representatives of Libya's Interim Governing Council on the steps of the Elysee Palace in Paris, as the European Union approved further sanctions to address the country's bloody crackdown and declare Gadhafi's strongman rule over.

''We must now engage in dialogue with the new representatives in Libya,'' French Foreign Minister Alain Juppe said.

Sarkozy promised to exchange ambassadors with the council, according to his office, which later described the move as a political gesture, not an act with international legal impact.

Libya's Interim Governing Council is an umbrella group made up of rebels based in the eastern city of Benghazi, which was taken over in a deadly uprising that has spread throughout much of the oil-rich North African country.

At a meeting of EU foreign ministers in Brussels, Juppe came under immediate pressure for forcing a crack in the diplomatic front the West has shown since fighting began in Libya last month, with British Foreign Secretary William Hague admonishing, ''we recognize states rather than groups within states.''

''It didn't win a consensus; quite the opposite,'' Belgian Foreign Minister Steven Vanackere said of the French move. ''It won reserved, even negative reactions.''

The Netherlands, which still has an ambassador and embassy in Tripoli, was taken aback. The country is in an especially difficult position, because it is still trying to negotiate the release of three marines captured in Sirte, a Gadhafi stronghold.

''There is not yet enough clarity about these opposition groups in and around Benghazi,'' said Dutch Foreign Minister Uri Rosenthal, who preached caution.

EU nations agreed Thursday to increase financial sanctions to isolate Gadhafi's government as the union prepared to hold an emergency summit Friday. Also Thursday, Nato defense ministers discussed the imposition of a no-fly zone over Libya to protect civilians from being bombed by government planes.

The EU sanctions added five financial institutions whose assets and resources will be frozen to a list of more than two dozen individuals close to the Libyan leader. Germany also froze billions of euros (dollars) of Libya's central bank and state-run agencies.

''There is no further cooperation with Gadhafi possible,'' German Foreign Minister Guido Westerwelle said.

''Sanctions must be broadened, more have to be decided, so that Gadhafi gets no fresh money to pay mercenaries that he uses against his own people.''

Despite that kind of rhetoric from European leaders, the Libyan government was making a last-minute effort to sway them. Mohamed Tahir Siala, a Libyan envoy, met Thursday with two Greek foreign ministry officials.

He had held similar talks in Lisbon on Wednesday with Portugal's Foreign Minister Luis Amado.

EU nations appeared unconvinced and said any contact with envoys amounted to passing the message that Gadhafi must leave.