The New Popular Front (NFP), a leftist coalition, achieved the most votes in the second round, winning 182 seats in the country’s lower house of parliament. President Macron’s centrist Ensemble coalition took second place, securing 168 seats, leaving Marine Le Pen’s far-right National Rally (RN) and its allies trailing in third place with 143, according to interior ministry data.

The NFP’s surprise win was the result of agreements between it and Ensemble to work together to block the far right after RN took 33% of the vote in the first round a week earlier. The two groupings withdrew more than 200 candidates nationwide in order to maximize the chances of better-placed contenders.

RN leader and Le Pen protégé Jordan Bardella described the collaboration as a “disgraceful alliance” while Le Pen herself remained defiant, saying: “Our victory has been merely delayed.”

With no single party or alliance winning the required 289 seats for a mandate to govern, France now faces a period of horse-trading between the NFP and Ensemble, including over the issue of who will become the next prime minister.

The incumbent, Gabriel Attal, said on Monday he would resign but offered to continue in the role for as long as needed, mindful of the fact that Paris will host the summer Olympics in July and August. The choice of a new head of government is far from clear as the hastily-formed NFP has no leader and its constituent parties are divided over the issue.

The fragmented parliament threatens political instability that will likely weaken France’s position internationally and particularly within the EU, Reuters commented. It will also mean the French political scene will have to become more cooperative and seek compromise across party lines.

“The message I'm hearing from the voters is 'no one has an absolute majority, so you have to work together to find solutions to our problems',” Yael Braun-Pivet, an MP of Macron’s Renaissance party and former leader of parliament, was quoted by Reuters as saying.

The political stalemate in the euro zone’s second largest economy will also likely rattle markets.

"There's really going to be a vacuum when it comes to France's legislative ability," Reuters quoted a London-based foreign-exchange analyst as saying.