By John Irish and Nicholas Vinocur
TOULOUSE, France (Reuters) - France's presidential election race resumes on Friday, irrevocably altered by the killing of an al Qaeda-inspired gunman whose murders have shifted the political debate in favor of incumbent Nicolas Sarkozy.
Mohamed Merah's cold-blooded shootings of seven people, including three Jewish schoolchildren, forced politicians to suspend normal campaigning while a giant manhunt closed in on the 23-year-old unemployed panel-beater.
That hunt ended in a cacophony of gunfire shortly before midday on Thursday, after a 30-hour siege in the southern city of Toulouse. Merah was shot in the head as he clambered out of a ground floor window with all guns blazing, fulfilling his macabre wish of dying with a weapon in his hand.
Counter-terrorism operatives said they had wanted to capture him alive, but had been forced to kill him when he began to fire at police commandos searching his flat, wounding at least two of them.
The young self-styled Islamist's crimes spread fear, triggered an emotive debate about immigration and integration, and gave Sarkozy a small bounce in the polls as he sought to close the gap behind Socialist rival Francois Hollande.
With only one month left to go before the first round of the election, Merah's influence is likely to endure.
"Of course what has happened in the past week has changed the course of events," a senior Sarkozy campaign adviser said on Thursday, speaking on condition of anonymity.
"There wasn't much talk about security and terrorism before. But this is going to raise questions about our system of integration, our approach to fundamentalism and our tolerance of certain practices here. You're going to hear a lot about that in the weeks to come," he said.
CAMPAIGNING RESUMES IN EARNEST
President Sarkozy will visit the northern French town of Valenciennes on Friday where he is expected to tour urban renovation projects, industrial facilities, and purpose-built housing for workers.
The first opinion poll conducted since Merah committed his third and deadliest attack at a Jewish school in Toulouse on Monday showed Sarkozy surging past Hollande in the April 22 first round, even though it predicted Hollande would still win a May 6 runoff.
A second poll showed Sarkozy had also trimmed Hollande's lead in the second round and that voters considered him more credible on security and immigration issues, which are likely to increasingly come into focus in the campaigns.
Analysts say Sarkozy has capitalized on his role as the incumbent during the crisis, portraying himself as a statesman, and his right-leaning rhetoric on immigration and law and order has appeared topical, even if it raises the hackles of the left.
The question is whether he can keep the focus of the pre-election debate on law and order, where he is seen as being more comfortable, or whether his rivals can turn the spotlight back onto issues such as unemployment, the economy and social justice, on which he is perceived as weaker.
Far-right leader Marine Le Pen, who claimed after the shootings that entire suburbs had been surrendered to Islamist radicals by negligent politicians, will on Friday restart her own campaign - by visiting the tourist attraction of Mont Saint-Michel in Normandy - while her father Jean-Marie will travel to the southern town of Nimes.
Hollande, who remains the front-runner despite his failure to match Sarkozy's man-of-action profile during the crisis, will also be out on the stump as will centre-right candidate Francois Bayrou.
INVESTIGATION SET TO DEEPEN
Police investigators are working to establish whether Merah had worked alone or with accomplices. The interior ministry had said there is no evidence Merah belonged formally to any group.
The killings have raised questions about whether there were intelligence failures and what the attacks mean for social cohesion and race relations in France.
Opposition leaders demanded to know how Merah was able to amass a sizeable weapons cache and embark on his killing spree despite being under surveillance and having been questioned as recently as November by the DCRI domestic intelligence service following a trip to Afghanistan.
In Washington, two U.S. officials said Merah had for some time been on a U.S. government "no-fly" list, barring him from boarding any U.S.-bound aircraft. A Spanish interior ministry spokesman said police there were investigating whether Merah had ever met activists in Spain.
Merah had a police record for minor offences and reportedly spent two weeks in a psychiatric hospital after attempting suicide while serving an 18-month prison sentence.
Merah had told negotiators he was trained by al Qaeda in Pakistan and killed three soldiers last week and four people at a Jewish school on Monday to avenge the deaths of Palestinian children and because of French army involvement in Afghanistan.
Sarkozy called Merah's killings terrorist attacks and announced a crackdown on people following extremist websites.
He said an inquiry would be launched into whether French prisons were being used to propagate extremism and urged people not to seek revenge.
"From now on, any person who habitually consults websites that advocate terrorism or that call for hate and violence will be punished," he said in a statement. "France will not tolerate ideological indoctrination on its soil."
(Additional reporting by Paul Taylor, Catherine Bremer, Jean Decotte in Toulouse and Daniel Flynn, Geert de Clercq, Leigh Thomas and Alexandria Sage in Paris; Writing by Andrew Osborn; Editing by Andrew Roche)