French senators Monday passed a bill outlawing the denial of the Armenian genocide, with a seething Turkey slamming the move and warning of consequences while Armenia hailed a day "written in gold."

The French Senate approved by a vote of 127 to 86 the measure which threatens with jail anyone in France who denies that the 1915 massacre of Armenians by Ottoman Turk forces amounted to genocide.

French President Nicolas Sarkozy, whose right-wing UMP party put forward the bill, must now sign the bill for it to become law.

Turkey furiously denounced the move, with Justice Minister Sadullah Ergin telling CNN-Turk television that it was "a great injustice and shows a total lack of respect for Turkey."

"If the law is adopted by the government, the consequences will be permanent," the spokesman for the Turkish embassy in Paris, Engin Solakoglu, told AFP. "France is in the process of losing a strategic partner."

Armenia meanwhile praised the vote, with Foreign Minister Edward Nalbandian saying: "This day will be written in gold not only in the history of friendship between the Armenian and French peoples, but also in the annals of the history of the protection of human rights worldwide."

The vote "will further consolidate the existing mechanisms of prevention of crimes against humanity", the statement said.

When France's lower house passed the bill last month, Ankara froze political and military ties with Paris.

Earlier Turkish Foreign Minister Ahmet Davutoglu, who cancelled talks with European Union foreign ministers in Brussels on Iran's nuclear drive to deal with the crisis, said Ankara had already prepared its response.

"We have previously determined the steps to be taken if the bill is finally adopted. No one should doubt it," the state-run Anatolia news agency quoted Davutoglu as saying.

Davutoglu said Saturday the law would trigger "permanent sanctions", arguing that it goes against European values and would not help Turkish-Armenian relations.

Trade between France and Turkey was worth 12 billion euros ($15.5 billion) in 2010, with several hundred French businesses operating there.

Turkish Prime Minister Recep Tayyip Erdogan accused France of hypocrisy and Sarkozy of pandering to France's estimated 400,000 voters of Armenian origin, three months ahead of a tough re-election battle.

"I hope the Senate will not make France a country contradicting its own values," Erdogan said. "This is a debate which is entirely against the freedom of thought. This is merely a step taken for the upcoming elections."

Erdogan had closely followed the debate and had met with Davutoglu to put final touches on the measures Ankara could take, according to media reports.

The Turkish media showed intense interest in the vote, with many Turkish news channels broadcasting the session live.

Turkey's deputy prime minister Bulent Arinc warned that Ankara could ask Europe's top rights court to denounce Paris if the legislation is adopted, a move he said would be a "historic shame".

Around 15,000 Turks from France, Belgium, The Netherlands and Luxembourg rallied peacefully on the streets of Paris on Saturday to protest the law.

Several hundred Turks and Armenians separated by riot police demonstrated outside the Senate as the debate began.

Gendarmes were deployed within the chamber, checking the identities of those going in, a rare precaution. Dozens of foreign media, particularly Turkish, filled the press gallery.

The bill has not won universal support in the French government, where some ministers fear it will hurt diplomatic and trade ties with a NATO ally and major economic partner.

Even Sarkozy's Foreign Minister Alain Juppe has admitted the bill is "untimely".

Armenians say up to 1.5 million of their forebears were killed in 1915 and 1916 by the forces of Turkey's former Ottoman Empire.

Turkey disputes the figure, arguing that only 500,000 died, and denies this was genocide, ascribing the toll to fighting and starvation during World War I and accusing the Armenians of siding with Russian invaders.

France has already recognised the killings as a genocide, but the new bill would go further, by punishing anyone who denies this with a year in jail and a fine of 45,000 euros ($57,000).