Former French president Nicolas Sarkozy was placed under formal investigation on Tuesday over irregularities in his 2012 re-election campaign finances, the Paris Prosecutor said, dealing a serious blow to his hopes of running again in 2017.

Sarkozy, 61, was questioned all day by magistrates at the Paris financial prosecutor's office before being notified that he was under investigation for "suspected illegal financing of an election campaign for a candidate, who went beyond the legal limit for electoral spending".

The legal move is a prelude to a possible trial but does not lead automatically to prosecution. However, it means he will be tied up in legal proceedings for months to come, making it hard for him to contest a center-right primary in November ahead of next year's presidential election.