Hollande says US spying allegations threaten free trade pact

French President Francois Hollande warned Monday that allegations of Washington spying on its allies were threatening talks on a crucial free trade pact, despite US efforts to downplay the growing espionage scandal.

European sources said anger over the alleged bugging of EU offices was genuine and warned the scandal could escalate into a "serious" political crisis, just as Washington and the EU are set to begin sensitive talks next week on the biggest free trade deal ever negotiated.

US Secretary of State John Kerry's insistance that information-gathering was "not unusual" did little to stem increasing European fury, with Hollande demanding Washington immediately put an end to spying on EU diplomatic missions.

In the first direct response by a European head of the state to the scandal, Hollande said Paris had demanded answers from Washington about reports that the US National Security Agency (NSA) bugged European offices and embassies.

"We cannot accept this kind of behaviour between partners and allies," Hollande told journalists during a visit to the western city of Lorient.

"We ask that this immediately stop," Hollande said. "There can be no negotiations or transactions in all areas until we have obtained these guarantees, for France but also for all of the European Union."

His comments came after Kerry told reporters at a security forum in Brunei that he was looking into the allegations, but also suggested the spying was business as usual.

"I will say that every country in the world that is engaged in international affairs, of national security, undertakes lots of activities to protect its national security and all kinds of information contributes to that," Kerry said.

"All I know is that is not unusual for lots of nations. But beyond that, I'm not going to comment any further until I have all of the facts and find out precisely what the situation is."

Travelling with President Barack Obama on a tour of Africa, US Deputy National Security Advisor Ben Rhodes declined to comment directly on the spying allegations but said relations with Europe would remain strong.

"We cooperate with Europe on so many issues, we are so closely aligned in terms of our interests in the world that those relationships are going to stay strong," Rhodes said aboard Air Force One.

"We are going to cooperate with them on security issues, on economic issues and frankly we obviously also share a set of democratic values with them that I think can transcend any controversy."

In fresh revelations attributed to fugitive leaker Edward Snowden, a former NSA contractor now holed up at Moscow airport, Monday's Guardian newspaper said France, Italy and Greece were among 38 "targets" of spying operations by US intelligence services.

This came after a report in German weekly Der Spiegel detailed alleged covert surveillance by the NSA on EU diplomatic missions.

One document, dated September 2010 and classed as "strictly confidential", described how the NSA kept tabs on the EU's mission in Washington, Der Spiegel reported.

Microphones were allegedly installed in the building and the computer network was infiltrated, giving the agency access to emails and internal documents.

Der Spiegel said the EU delegation at the United Nations was subject to similar surveillance and the spying had also extended to the 28-member bloc's Brussels headquarters.

German government spokesman Steffen Seibert said Berlin had conveyed its "astonishment" and "great displeasure" to the White House about the allegations.

"Europe and the United States are partners, are friends, are allies. Trust must be the basis of our cooperation and trust must be restored in this area," he told reporters. "This is not the Cold War anymore."

European Justice Commissioner Viviane Reding said the trade talks could be in jeopardy, saying the EU cannot negotiate "if there is any doubt that our partners are bugging the offices of European negotiators".

In light of the allegations, European Commission chief Jose Manuel Barroso's office said he had ordered a full security sweep of all its premises worldwide.

A European Union source said officials could not simply brush the allegations aside.

"If it's true that the Americans have been spying on their allies, then there will be a political fallout," the source told AFP, speaking on condition of anonymity.

"This goes far beyond the requirements of national security. It is a breach of trust and we are at the beginning of something very serious."

The German and French foreign ministries said the US ambassadors to their countries had been invited to discuss the issue, though neither capital officially summoned the envoys -- a formal diplomatic move when tensions develop between governments.

French Foreign Minister Laurent Fabius was also to hold a telephone conversation with Kerry on the issue later Monday, officials said.