PARIS (Reuters) - France tried to reassure Britain, yesterday, that its push for tougher financial regulation in the European Union would not undermine the City of London, saying new rules would not hurt any one system in particular.

Tensions between the two countries have risen after Sarkozy said the appointment of former French minister Michel Barnier to the EU's internal market portfolio was a "victory" for France and Europe's economic model and a loss for free-market Britain.

Britain fears Barnier will push tough regulation that could undermine London as the EU's most important financial centre.

French President Nicolas Sarkozy's office said he would meet British Prime Minister Gordon Brown in Brussels next week and Barnier said he would visit London before the end of the year. "There is no reason for this controversy as the rules of the game are clear," Barnier told Reuters.

"I plan to work with everybody. I'm not an ideologist. I'm very practical. Everybody needs to calm down," he added.

Economy Minister Christine Lagarde highlighted Barnier's credentials as a former diplomat and foreign minister and said he understood the need for a prosperous financial sector combined with intelligent regulation.

"Nobody can say that no regulation, or soft regulation as Gordon Brown called it when he was Chancellor, did us any good," she said on LCI Television.

"Everybody agrees that the system must change ... There is no reason for such and such a system to become a victim of reorganisation or of good supervision."

Barnier said he will meet British Finance Minister Alistair Darling before Christmas.