UPDATE 2-AU keeps Madagascar suspension despite new deal

* AU maintains Madagascar suspension despite pact

* France welcomes the agreement

* Executive powers a possible source of friction

(Recasts with African Union, adds French govt comment)

By Alain Iloniaina

ADDIS ABABA, Nov 7 (Reuters) - The African Union (AU) said on Saturday it would not re-admit Madagascar until a newly agreed power-sharing government was in place and fresh elections in the pipeline.

Earlier, the island's rivals signed a deal under which coup-instigator Andry Rajoelina would remain president, accompanied by two new co-presidents.

Deposed leader Marc Ravalomanana had rejected any accord which would have seen his successor retain sole leadership of the oil and mineral-endowed country.

"The sanction against Madagascar is not yet lifted. First the transition's institutions must be set up and functioning and there is a clear roadmap towards elections," Ramtane Lamara, president of the AU's Peace and Security Council told Reuters.