EU leaders rallied round French President Jacques Chirac on Wednesday calling for a revision of controversial EU economic reform plans which are fueling anti-EU sentiment in France ahead of a crucial vote.

Expressions of support for Chirac came on the second and final day of a summit aimed at reviving the bloc's flagging economy, but clouded by polls indicating French voters could reject the EU's first-ever constitution in an upcoming referendum.

"The stakes are very high. We must show at least a degree of flexibility if we risk the rejection of the constitutional treaty," said Polish Prime Minister Marek Belka.

German Chancellor Gerhard Schroeder also reiterated his support for Chirac, who has been alarmed by two recent opinion polls suggesting that French voters could vote "non" in a May 29 referendum on the constitution.

He said plans to free up Europe's vast services sector -- which generates 70 percent of output across the 25-member bloc -- had to be tempered to ensure that they do not lead to huge job losses in rich western European countries.

"We need open markets in the services sector," said Schroeder, but added: "They must be built in such a way that does not produce salary dumping, or social dumping, so that order can be maintained in the jobs market," he added.

The first day of the EU's traditional spring economic summit also had good news for Chirac as well as Schroeder, when their EU colleagues approved a loosening of long-strained EU budget rules.

The reform of the Stability and Growth Pact, which enshrines the rules underpinning Europe's single currency, will give more leeway to the two EU heavyweights to take measures to revive their ailing economies.

On Wednesday the focus of talks was squarely on relaunching the EU's Lisbon Strategy, an economic reform plan launched in 2000 aimed at making the EU the world's most competitive economy by the end of the decade.

That aim has been dropped, but the EU leaders agreed a watered-down version of the Lisbon project focused much more narrowly on boosting jobs and growth.

But wrangling over the services directive dominated discussion, in particular because of its potential fallout on the French referendum.

If the French vote "non" to the constitution, designed to streamline the running of the 25-nation European Union, the whole future of European integration could be thrown into doubt.

The services directive aims to create a true single market in services, as there now is in goods, but many Europeans fear it will spell the end of long-standing social benefits and give such jobs away to low-wage regions.

EU industry commissioner Guenter Verheugen hailed agreement that there is need for "far-reaching" reform of the directive.

And European Commission chief Barroso said he hoped that "the French people will show their commitment to European values", adding that "France is a country which is of course crucial for Europe."

Meanwhile EU plans to lift a 15-year-old arms embargo on China continued to fuel debate in the sidelines of the summit, although the issue was not on the formal agenda.

EU foreign policy chief Javier Solana said the ban, slapped on Beijing after the Tiananmen Square massacre in 1989, was "unfair" given the changes in China over the last decade and a half.

The EU has been aiming to end the embargo by June, but China's adoption of an anti-secession law authorizing the use of force against Taiwan has complicated the matter.

Solana said Wednesday it was "too early" to say when the ban will be lifted.