POTSDAM Germany AP Germany and France agreed Friday that fighting unemployment should be Europe's top priority throwing their weight behind a shift toward a left-leaning agenda among European governments. French and German leaders also called for tighter international scrutiny of the financial world including highly speculative ``hedge funds'' seen as a way to counter economically damaging swings in the markets. In a joint declaration after a two-day German-French summit the leaders said a jobs creation pact is needed to offset years of government austerity measures to get Europe ready for the single currency the euro being launched Jan. 1. They called for putting ``the fight against unemployment at the center of European politics'' and urged member governments of the European Union to set binding goals for putting their citizens back to work. The appeals bore the stamp of Germany's new Social Democratic chancellor Gerhard Schroeder hosting his first summit with Germany's closest European partner since he won September elections. Schroeder met both French President Jacques Chirac and Prime Minister Lionel Jospin at Potsdam outside Berlin. ``On the threshold of the 21st century we are determined to deepen these relations in the interest of European unity and to give them fresh momentum'' the declaration said. Both sides agreed to push plans to merge European aerospace industries to take on U.S. giants Boeing and Lockheed Martin though they didn't resolve the issue of French participation. Schroeder told Chirac during the summit that he supports bringing together the British and German industries first if France doesn't join in from the start. He stressed though that the door would be left open to the French. The big European aircraft makers Daimler-Benz Aerospace British Aerospace and Aerospatiale agreed in principle in March to seek a merger. Daimler-Benz Aerospace and British Aerospace are in advanced talks on a two-way alliance but one stumbling block to Aerospatiale's early participation is that the aircraft maker is still partly government-owned and progress toward full privatization has been slow. With the euro binding 11 European economies closer together than ever before the leaders pledged to seek common European policies on taxes and workers' rights. Schroeder called Monday for ``a new beginning'' in German-French relations Europe's most important partnership and traditionally the engine behind the drive for postwar European unity. Germany and France hold summits twice yearly but this meeting has special significance because of the euro's debut and Germany's six-month EU presidency starting Jan. 1. German demands to lower its contribution to the EU budget were one of the summit's more thorny topics. But German deputy foreign minister Guenter Verheugen said that the French showed ``great understanding'' for Germany's pressure which comes as the EU tries to streamline its budget and administration to get ready for new members from the former Soviet bloc. Germany the biggest contributor to the EU budget annually pays in 22 billion marks dlrs 12 billion more into EU coffers than it gets out in funds. UR; tc-cb APW19981201.0925.txt.body.html APW19981201.0871.txt.body.html