EU Competition Commissioner Joaquin Almunia said last month the Banque PSA debt rescue had initially been portrayed as financing help for the lending operation that would not require state aid approval from Brussels.

But he said the Commission had come to view the 7-billion-euro ($9.2 billion) state loan guarantee as restructuring aid and decided to ask the French authorities to seek approval.

The rescue deal will have to be examined by EU competition authorities, which should give an answer within two months, Les Echos said.

"This is a normal process," a spokesman for Peugeot said.

"Following the vote of the French parliament on December 30 on the state guarantee brought to Banque PSA Finance, a temporary authorization should be given within two months before a final authorization," he said.

The approval by Brussels could require Peugeot to make more concessions including toughening its staff reduction plan, which already includes a minimum 8,000 layoffs, the paper said.

"As for concessions, there is nothing new compared with what was announced last year," the spokesman said.

A state aid probe by Brussels could ultimately increase the cost to Peugeot of the state loan guarantee and the 11.5 billion-euro refinancing deal to be finalized with creditors next month.

The rescue plan came after Peugeot suffered a downgrade by credit rating agency Moody's in October, raising the likelihood that financing arm Banque PSA Finance (BPF) would also be downgraded to junk status.

($1 = 0.7654 euros)

(Reporting by Alice Cannet; Editing by Mark Potter)

• A Permanent Economic Emergency