French President Nicolas Sarkozy will visit Spain and meet with Spanish Prime Minister Mariano Rajoy on Monday,according to Spanish government.

Sarkozy is the first foreign leader to visit Madrid after Rajoy won the general election on November 20 last year and swore into power on December 21.

The pair will meet at Rajoy's residence, the Palacio de la Moncloa, just days after rating agency Standard & Poor's took away France's triple-A credit rating and cut Spain's rating by two notches to AA- on Friday, causing Spain's risk premium to rise sharply.

Rajoy had seen the Spanish Congress approve his new government's first package of measures aimed at combating the economic crisis and keep the public deficit under control.

Those measures included wide ranging spending cuts as well as rises in income and property taxes.

Meanwhile Rajoy spoke on Friday to stress the need for labor reforms, hinting his government was prepared to act even if there is no agreement with the country's labor unions.

Rajoy's Vice-President, Soraya Saenz de Maria further prepared the ground for this reform on Sunday by asking both employers and unions to use all of the possible time to reach an accord.

Sarkozy, meanwhile, is looking to present an image of calm in the face of the obvious setback suffered on Friday, as the French Presidential elections closes in.

The two leaders are expected to present a united front on the economy in order to stave off further losses.

Rajoy and Sarkozy are also likely to discuss the question of Basque separatist group ETA in their meeting. Spain and France have long collaborated effectively in the fight against ETA, and Saturday saw the detention of three suspected members of the band in central France.

These were the first ETA suspects to be arrested since Rajoy came to power, and are the sixth, seventh and eighth people to be arrested since ETA formally announced a definitive end to its 45-year terrorist campaign for the independence of the Basque country, in the run in to the General Elections.