Nicolas Sarkozy, head of France's Les Republicains political party and former French President, speaks on the second day of his party's national council in Paris, France, in this photo taken February 14, 2016. [Photo/Agencies]

PARIS - Former French President Nicolas Sarkozy was placed under investigation on Tuesday in a scandal 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 centre-right primary in November ahead of next year's presidential election.

Sarkozy has repeatedly denied knowledge of dual accounting and some 18 million euros ($20.1 million) in false invoices issued by the Bygmalion event organisation company that meant his campaign costs were more than double the legal limit.

Four senior figures in the 2012 campaign have already been placed under investigation for alleged political financing offences, including his campaign manager and treasurer, as well as four former Bygmalion executives.

Sarkozy's lawyer Thierry Herzog told reporters he would appeal the decision, but that the maximum penalty he could face was a fine of 3,700 euros.