The far-right National Front also made gains, picking up a greater than predicted 12 per cent of the vote.
Jean-Marie Le Pen, the party's leader, appeared jubilant on national television, holding up a poster banned by a court that read "No to Islamism" and declaring that his party's future was bright.
The UMP's poor showing, combined with an unusually low turnout of 47 per cent for the vote to elect 26 regional councils, is being seen as indicative of discontent with Sarkozy.
"Contrary to the forecasts, nothing is decided for the second round"
French prime minister
Many blame him for failing to protect jobs as France reels from the global economic slowdown, which has sent unemployment soaring to its highest level in a decade, with nearly three million people now out of a job.
"People feel that there is no real debate on the political scene in France, that everything is within an elite and that real matters like unemployment, immigration and insecurity are not there to be debated," Renaud Girard, chief correspondent for the French newspaper Le Figaro, told Al Jazeera.
The Socialists already control 20 of the 22 French regions spread across the mainland and Corsica, along with the four councils in overseas territories.
But Francois Fillon, the French prime minister, went on television soon after polls closed on Sunday, to call on voters to turn out for a second round.
"Contrary to the forecasts, nothing is decided for the second round," he said.
Ahead of his election in 2007, Sarkozy had promised sweeping reforms to make France's economy more dynamic by loosening labour protections.
But he changed his free-market rhetoric when the financial crisis hit, calling for a more "moral capitalism", including limits on bankers' bonuses and in recent days for global regulations of hedge funds.
Stimulus packages and government intervention to keep car-maker Renault from sending car making jobs to Turkey have failed to shore up Sarkozy's approval ratings, down below 40 per cent.
Workers from day cares to oil refineries staged strikes or protests last week, or locked up their bosses to protest factory closures.