BRUSSELS, Feb 28, 2009 (AFP) - The European Commission gave its blessing on Saturday to France's aid plan for its ailing auto sector, easing tensions on the eve of an EU summit overshadowed by a row over economic protectionism.

The EU's competition commissioner declared herself satisfied with guarantees from Paris that the French bailout scheme is not protectionist against its fellow EU member states.

French Secretary of State for Industry Luc Chatel sent a letter to EU Competition Commissioner Neelie Kroes earlier Saturday stating that French authorities "have undertaken not to implement aid measures to the automotive sector that would contravene the principles of the internal market," the commission said in a statement.

In particular, France assured that state loan agreements with manufacturers "would not contain any condition regarding either the location of their activities or a preference for France-based suppliers."

"I am satisfied with the guarantees set out by the French authorities on the absence of protectionist elements in the plan for aid to the automotive sector," Kroes said.

President Nicolas Sarkozy this month announced plans to lend PSA Peugeot Citroen and Renault three billion euros (3.9 billion dollars) each and other measures in exchange for a promise not to shut French plants or move to cheaper sites "in the Czech Republic or elsewhere".

The announcement was met by accusations of protectionism around Europe.

Czech Prime Minister Mirek Topolanek, whose country holds the EU's rotating presidency and is Eastern Europe's biggest car producer, called the French "protectionist" measures "unacapptable".

Nine central and eastern European leaders will hold a pre-summit in Brussels on Sunday morning, seeking a common line to tackle their western partners on the issue of protectionism.

The European Commission has tried to keep the bloc in step, decrying national economic protectionism on the one hand while showing more tolerance to state bailout schemes on the other.

The car sector is a particularly high-stakes area.

One of the worst hit by the recession which has seen unemployment rise and consumer and business confidence fall, it is also one of Europe's biggest employers, with 12 million jobs at stake.

The commission warned earlier that the plan might break European Union laws against protectionism amid sniping from the Czech Republic and Slovakia as well as the German industry.

All sides were keen to put the matter to rest before the extraordinary EU summit in Brussels Sunday dedicated to the economic crisis and amid fears over protectionism uppermost among many, particularly the poorer European nations.

A French diplomat welcomed the EU announcement on Saturday, stressing that "there is no protectionism, no distortion," in the French scheme.

The French plan had support from Spain and Italy, which have their own auto schemes aimed at keeping jobs at home.

Sarkozy called Thursday for the European Union to come up with a "global plan of support" for the ailing auto industry as an EU crisis summit loomed.

Some in Paris said he would be thumping tables in Brussels if the French scheme wasn't approved.

A more conciliatory France, and less wary eastern partners should give the EU summiteers a better chance of boosting coordination over the economic crisis and maintaining an effective signal market.

"It was important for the commission to remove all ambiguity in this case, as Europe must avoid a return to protectionism and its negative consequences for employment in Europe. I am particularly vigilant in this respect," said Kroes.

However the Commission stressed that it would "monitor closely the implementation of this plan," to ensure that the non-protectionist assurances are implemented.