France's President Nicolas Sarkozy conceded defeat to his Socialist rival Francois Hollande  and signalled that he intends to step back from frontline politics.

"The French people have made their choice... Francois Hollande is president of France and he must be respected," the outgoing leader told an emotional crowd of supporters, adding that he had phoned his successor to wish him well.

"In this new era, I will remain one of you, but my place will no longer be the same. My engagement with the life of my country will now be different, but time will never strain the bonds between us," he told supporters.

Sarkozy stopped short of confirming his retirement, but leaders in his right-wing UMP party told AFP that he had told them that he would not lead them into June's parliamentary elections.

The 57-year-old was reasonably gracious in defeat, wishing his Socialist successor well, but could not resist a last stab at the opposition camp.

"Let us be dignified. Let us be patriots. Let us be French. Let us be the exact opposite, the opposite, of the impression that some others might have given if our roles had been reversed," he said, to angry cheers.

Earlier, voting estimates from the second round vote had confirmed that Hollande had beaten Sarkozy by around 52 percent to 48. The Socialist leader is expected to be sworn into office by May 15.