By Edmund Blair and Raya Jalabi
BEIRUT (Reuters) - Lebanon's prime minister-designate quit on Saturday after trying for almost a month to line up a non-partisan cabinet, dealing a blow to a French plan aimed at rallying sectarian leaders to tackle the worst crisis since the nation's 1975-1990 civil war.
Mustapha Adib, former ambassador to Berlin, was picked on Aug. 31 to form a cabinet after President Emmanuel Macron's intervention secured a consensus on naming him in a country where power is shared out between Muslims and Christians.
A source close to Macron said the situation that led to Adib's resignation amounted to "collective betrayal" by political parties but said France, the former colonial power, would not abandon Lebanon.
Under the French roadmap, the new government would take steps to tackle corruption and implement reforms needed to trigger billions of dollars of international aid to fix an economy that has been crushed by a mountain of debt.
Lebanon faced a further knock when a huge explosion at Beirut port on Aug. 4 ruined a swathe of the capital.
Adib - a Sunni Muslim, as the prime minister has to be under the sectarian power-sharing system - announced he was stepping down but said Lebanon must not abandon the French plan or squander Macron's goodwill.
"I stress that this initiative must continue," he said after meeting President Michel Aoun, a Christian. He wished his successor well in the "hard task" of forming a government.
Politicians, whose loyalties tend to follow confessional lines, had promised Paris they would have a government in place by mid-September.
But Adib's efforts stumbled in a dispute over appointments, particularly the post of finance minister, who will have a key role in drawing up economic rescue plans.
"It's a setback, but we're not giving up," a French diplomatic source said.
Talks with the International Monetary Fund on a vital bailout package stalled this year, and one of the cabinet's first tasks would have been to restart the negotiations.
The street value of the Lebanese pound, which has plunged from an official peg of 1,500 to the dollar since the economic crisis erupted last year, weakened further. One trader said it was trading at 8,200, from 7,700 on Friday.
Lebanon's Al-Jadeed TV reported protests by small groups burning tyres and blocking roads in the northern city of Tripoli and Sidon in the south, particularly over the currency whose tumble has driven many into poverty.
The cabinet formation hit a deadlock over a demand by Lebanon's two main Shi'ite groups, Amal and the heavily armed Iran-backed Hezbollah, that they name several ministers, including finance, a position previously held by a Shi'ite.
Adib held several meetings with Shi'ite politicians but failed to reach agreement on how the minister would be chosen.
Shi'ite leaders feared being sidelined as Adib sought to shake up appointments to ministries, some of which have been controlled by the same faction for years, politicians said.
Mohanad Hage Ali of the Carnegie Middle East Center said Iranian-backed factions might have wanted to stall the cabinet formation to await the result of a U.S. election on Nov. 3.
U.S. President Donald Trump, seeking re-election, has taken a tough line on Iran and its allies, and his administration imposed sanctions on Lebanese politicians who back Hezbollah.
Amal leader and Parliament Speaker Nabih Berri said his group still backed the French plan. The Free Patriotic Movement, founded by Lebanon's president and allied to Hezbollah, also said it backed the French initiative and a new cabinet had to secure broad support. Critics said Adib did not consult enough.
(Additional reporting by Ellen Francis and Laila Bassam in Beirut and John Irish and Michel Rose in Paris; Writing by Edmund Blair; Editing by Jason Neely, Helen Popper and Andrew Heavens)