LEAD: France's Hollande reshuffles cabinet after election drubbing By Clare Byrne, dpa

Paris (dpa) - French President Francois Hollande carried out a major cabinet reshuffle Monday, a day after his Socialist Party suffered unprecedented losses in municipal elections which voters used to vent frustration with his leadership.

Prime Minister Jean-Marc Ayrault fell on his sword as expected, announcing his resignation and that of his government two hours before a prime-time television address by Hollande.

Hollande was expected to announce popular Interior Minister Manuel Valls as Ayraults replacement at the head of a revamped team that will lead the government into European elections in May.

Valls was the obvious choice to take the helm after 22 months of Socialist rule that has been criticized as ineffectual and amateurish.

Polls show him to be Frances favourite minister, with an approval rating of 46 per cent according to one recent poll, double that of either Hollande or Ayrault.

With his tough talk on immigration and general air of authority, Valls cuts a contrast with the mild-mannered Ayrault, who struggled to rein in unruly ministers.

But it has also made Valls a divisive figure within the Socialist Party.

Hollande had promised to "draw a lesson" from the elections for town councils and mayors.

The speed with which he has rejigged his team reflected the severity of the punishment meted out by voters.

The Socialists and their leftist allies lost control of 155 towns of over 9,000 inhabitants to right-wing parties. The losses included Reims in the north-east, Toulouse in the south-west and the central city of Limoges, a Socialist stronghold for over a century.

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LEAD: France's Hollande reshuffles cabinet after election drubbing By Clare Byrne, dpa