* France welcomes creation of Syrian military council
* Not ready to arm rebels, suspicions on rebel group a "problem"
By John Irish
MARRAKECH, Morocco, Dec 12 (Reuters) - France said on Wednesday it was not ready to supply weapons to Syrian insurgents fighting to oust President Bashar al-Assad and would be studying the role of an Islamist rebel group branded a terrorist organisation by the United States.
Western powers and Arab nations have recognised Syria's new opposition coalition as the legitimate representative of the Syrian people at talks in Morocco, according to a draft declaration. But feelings about arming the rebels are mixed.
"For now we have decided not to move on this," French Foreign Minister Laurent Fabius said. "We shall see in the coming months."
Many Western powers are reticent about sending weapons because they believe that some rebel groups, notably the al-Nusra Front, have links to al Qaeda and will seek to impose Islamic law if they succeed in toppling Assad.
Fabius, whose government was the first to recognise the Syrian opposition, welcomed the creation of a military council aimed at helping to coordinate rebel factions' military operations.
But suspicions regarding al-Nusra Front were a "problem" which meant that France and Britain had no intention immediately of reviewing a three-month extension of an arms embargo on Syria, he said.
"For now we are not moving," he said. "There is no question of putting jihadis into this mechanism and this will be discussed more and more now that Nusra has been added to the list."
Fabius said the meeting had exposed differences of opinion on how the al-Nusra Front should be treated, with Arab states asking why a group which has proved its effectiveness against Assad's forces had been sidelined.
The leader of Syria's opposition coalition urged the United States to review its designation of the group, saying that religion was a legitimate motivation for rebel fighters.
Fabius said that France would study the issue.
"The United States considered that this group should be put on the terrorist list ... As far as France is concerned, we're going to study (al-Nusra's role) in detail, because it's an issue that cannot be avoided," he said.
Paris has previously said that the question of arming the rebels must be examined, but not until a legitimate opposition government with wide support was in place.
"The main difficulty is to embolden the resistance and accelerate Assad's fall without destroying existing institutions. We don't want to go down the Iraq path," he said.
Fabius said the coalition was maturing rapidly but still needed to make progress on protecting minority groups, and keep up efforts to relieve suffering for civilians on the ground.