By John Irish

PARIS (Reuters) - France said on Thursday that Central African Republic was "on the verge of genocide" and it expected the United Nations to give Paris and the African Union permission to intervene.

Central African Republic, a landlocked nation of 4.6 million people, has descended into violence and chaos since Seleka rebels, many of them from neighbouring Chad and Sudan, ousted President Francois Bozize in March.

The U.S. State Department estimates that nearly 400,000 people have been displaced and 68,000 have fled to neighbouring countries since Seleka leader and interim president Michel Djotodia has lost control of his loose coalition of warlords.

The violence has increasingly pitted Seleka's mainly Muslim fighters against Christian militias. Christians make up half the population and Muslims 15 percent, the CIA World Factbook says.

"The country is on the verge of genocide," French Foreign Minister Laurent Fabius told French television station France 2. "France, CAR's neighbours and the international community are worried. The United Nations will give permission to African forces, the African Union and France to intervene."

While U.N. Secretary-General Ban Ki-moon said on Monday he may be prepared to deploy U.N. peacekeepers, U.S. Secretary of State John Kerry has made it plain Washington favours an African peacekeeping force.

Ban said further tension "might well lead to uncontrollable sectarian violence with untold consequences for the country, the sub-region and beyond".

A 2,500-strong regional peacekeeping force is due to be beefed up next month and come under African Union command but there are increasingly urgent appeals for broader international action as the violence escalates.

The United States pledged $40 million towards the African Union security force on Wednesday.

INSTABILITY

France has about 400 troops in Central African Republic, mainly protecting the airport and French assets in the capital, but French diplomatic sources said that Paris would consider ramping up numbers to between 700 and 1,200 if needed.

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Paris still has more than 2,000 troops deployed in Mali, where it launched a major military offensive in January to destroy an Islamist enclave in the country's desert north.

Central African Republic has reserves of gold, diamonds and uranium, but decades of instability and the spillover from conflicts in its neighbours have left it crisis-prone and poor.

Uganda's brutal Lord's Resistance Army rebellion is one of the groups to have taken advantage of the absence of state authority in the country to seek out refuge.

The LRA waged a guerrilla war against Ugandan government for nearly two decades, before fleeing the country around 2005. Most of its fighters are thought to be hiding in an area straddling the borders of Central African Republic, South Sudan and Democratic Republic of Congo.

U.N and African Union officials said on Wednesday Djotodia had been in contact with the LRA and was attempting to convince its reclusive leader Joseph Kony to surrender.

However, the United States, which is backing a 5,000-strong African Union Regional Task Force to hunt down the LRA, has expressed doubts over reports of negotiations with Kony, who is wanted by the International Criminal Court for war crimes.

"We are aware that CAR authorities have been in contact for several months with a small LRA group in CAR that has expressed interest in surrendering," a senior State Department official said on Thursday.

"At this time, we have little reason to believe that Joseph Kony is part of this group."