By Crispian Balmer

PARIS (Reuters) - Police found explosives hidden in a Paris department store on Tuesday after a tip-off from a group demanding the withdrawal of French troops from Afghanistan.

The group called itself the Afghan Revolutionary Front, but French officials said they had never heard of it before and warned it might prove a false lead.

Police recovered five sticks of dynamite from the Printemps store. The explosives were not attached to detonators, suggesting that the aim was to spread alarm rather than cause death and destruction.

French President Nicolas Sarkozy, speaking in the eastern French city of Strasbourg, said France would not negotiate with terrorists and urged caution.

"At this point in time I would call on everyone to be very prudent and very measured," he said.

The tip-off was sent by letter to a French news agency, warning that several bombs had been planted in the Printemps store on the Boulevard Haussmann, which is usually packed with Christmas shoppers at this time of year.

Dynamite was found in lavatories on the second and third floors of the men's section of the store, which was allowed to reopen some five hours after the alarm was raised.

Police said there was no mention of Islam in the letter, adding that recent attacks in Europe tied to Iraq and Afghanistan had been launched without specific prior warning.

"Anything can be written in a text," said Interior Minister Michele Alliot-Marie. "There might be things that are designed to send one off in the wrong direction."

TROOPS IN AFGHANISTAN

France has more than 2,600 troops stationed in Afghanistan fighting Taliban forces. Last month, a militant group warned in a video aired on Al Arabiya television that it would attack Paris unless the soldiers were brought home.

Ten French soldiers were killed in a Taliban attack in Afghanistan in August and two died last month in a mine explosion.

French stores, markets and underground metro stations were bombed several times in the 1980s and 1990s, with Algerian or Middle Eastern militants often claiming responsibility.

Since the Sept. 11, 2001 attacks on the United States and France's participation in the U.S.-led war in Afghanistan, security officials have repeatedly said the country faces the threat of terrorist attacks.

The discovery of the explosives came at a particularly bad time for the French retail sector, which notches up a major chunk of its annual profits during pre-Christmas trading but is facing a downturn this year because of the financial crisis.

"The goal is to frighten people," said Valerie Plagnol, chief strategist at CM-CIC Securities. "Security will be boosted in stores, and sales could be affected."

Printemps is owned by the PPR retailer group. Its shares were up 3.37 percent by 1315 GMT.

Italian tourist Ilaria de Pasqua shrugged off the incident after she was prevented from entering Printemps by the police cordon.

"There are lots of shops. I am going to go to Galeries Lafayette instead," she said.