Prime Minister Lawrence Gonzi refused to be drawn today in the row between France and the European Commission on the deportation of Roma gypsies, but said that EU rules on the free movement of its citizens should be observed by all member states.

“The issue is very sensitive and we think that all member states should respect to the letter the rules of the EU. However an ongoing investigation on what exactly happened in France is going on and it wouldn’t be prudent to make further comments,” Dr Gonzi said.

The summit was dominated by France's Roma expulsions as President Nicolas Sarkozy rejected World War II parallels as "outrageous" and vowed to continue clearing "illegal camps".

The Paris-Brussels dispute shattered the agenda of the European Union parley and hung heavy in the air, with Sarkozy lashing out at European justice chief Viviane Reding for her criticism of France.

Reding's insinuation that the return of planeloads of Roma Gypsies to Romania and Bulgaria smacked of World War II scenarios was "a historical shortcut that profoundly hurt the French," Sarkozy said.

"These words were deeply hurtful, my duty as head of state was to defend France.

"All heads of state and government were shocked by the outrageous comments," he said.

German Chancellor Angela Merkel agreed, describing the historical parallel as "unfortunate", while British Prime Minister David Cameron said he was "shocked."

Hoping to stem the rift, EU president Herman Van Rompuy called for mutual understanding. "The relationship between states and European institutions must be based on respect," he said.

Van Rompuy said there was an EU consensus to ban discrimination based on nationality or ethnicity though member states could take domestic measures "to ensure respect of the law," on condition they were in line with EU legislation.

Though France has come in for a mass of criticism for its tough line on travellers, Reding's attack infuriated Sarkozy to the snapping point.

She also threatened to drag Paris before the European Court of Justice.

European Commission chief Jose Manuel Barroso -- Reding's boss -- reiterated that discrimination against ethnic minorities was "unacceptable."

Despite it all, Sarkozy said French authorities would continue to dismantle "all illegal camps," whoever they belonged to.

Originally scheduled to look at foreign policy, economic and trade issues, the summit boiled over into a blistering lunch-table dispute between Sarkozy and Barroso, head of the EU's executive arm.

Sarkozy denied he had argued with Barroso.

But several sources confirmed the dispute. Luxembourg Prime Minister said "it was a testosterone-heavy exchange" and Bulgarian Prime Minister Boyko Borisov described it as "fierce"

Barroso himself refused all comment, saying it was time to move on.

But another source said Barroso "vigorously defended" the role of the commission, which polices the application of EU-wide laws governing freedom of movement for all citizens.

In other business, leaders sealed a ground-breaking free-trade deal with South Korea and mulled ways of preventing a new economic crisis.

Foreign ministers also called on Israel to extend a freeze on new settlement building in East Jerusalem and agreed in principle to help flood-hit Pakistan.

But the row between France and the European Commission overshadowed events.

Sarkozy was also quoted as telling party allies that Luxembourg, from where Reding hails, could take France's Roma deportees, which the tiny state denounced Thursday as "inappropriate."

"What we've seen in the past few days of course is a little bit unusual for Europe," said Finland's Foreign Minister Alexander Stubb.

Reding, in a bid to ease tensions, expressed "regret," insisting that she "in no way wanted to draw a parallel between World War II and the actions of the French government today."

Italian Prime Minister Silvio Berlusconi, for his part, argued that "the problem of the Roma concerned every country in Europe."

Italy had its own brush with the commission in 2008 when it started to register Roma living in camps, taking fingerprints and documenting their ethnicity and religion.