By Ingrid Melander

PARIS, May 29 (Reuters) - A plan to overhaul labour rules is crucial to proving France's ability to reform, and the government will stand by it despite street protests and refinery blockades, Finance Minister Michel Sapin said in an interview.

The government is under pressure to find a solution to its standoff on the labour reform with hardline union CGT ahead of the June 10 start of the Euro 2016 football championship in France, which the union has threatened to disrupt.

"First and foremost we must be firm," Sapin said in an interview with Reuters and three European newspapers.

"Doing otherwise would be wrong with respect to (other) labour unions, most of whom support the text."

The hardline CGT union has organised street protests, train strikes and refinery blockades to pressure the government to scrap reform plans.

But the moderate CFDT, France's other major labour union, backs a reform that will allow firms to lay off staff more easily in hard times but also give unions more power to negotiate deals in each firm rather than at national level.

In the interview, Sapin said he agreed with the tough stance taken by Prime Minister Manuel Valls, and that he had been misunderstood when he told LCP television earlier this week that "maybe" a key article of the draft bill could be tweaked to compromise.

"Article 2 is the symbol of the ability of France to reform," Sapin said.

Article 2 would let companies opt out of national obligations on labour protection if they adopt in-house deals on pay and conditions with the consent of a majority of employees.

While that article is key for the CFDT, the CGT and smaller FO union have refused to accept it. They have threatened to disrupt the Euro tournament if the government does not back down.

For all the government's tough talk, another minister said, on condition of anonymity, that the government could not let the Euro championship be disrupted because it would be bad for France's image.

One option could be for lawmakers to tweak the bill when it comes back to the lower house of parliament for a second reading, that other minister said.

The government pushed the bill through the lower house of parliament with a decree, by-passing the first reading as it struggled to find enough lawmakers to back it. The final vote is expected in July.

The stand-off between the government and CGT worsened this week as the country mobilised strategic oil stocks for the first time in six years, and employers warned the protests were starting to hurt the economy.

Following a meeting between the government and oil industry representatives, Transport Minister Alain Vidalies said on Saturday that the situation at fuel depots was improving.

(Additional reporting by Maya Nikolaeva and Elizabeth Pineau; Editing by David Gregorio)