* ETA hand over list with locations for 8 weapon caches
* Separatists killed more than 850 in four decades
* Spain's government says action is positive but insufficient
* Democratic nationalism now on the rise in Europe (Adds Spanish, Basque responses)
By Claude Canellas, Sonya Dowsett and Isla Binnie
BAYONNE, France/MADRID, April 8 (Reuters) - Basque militant group ETA effectively ended an armed separatist campaign after almost half a century on Saturday, leading French authorities to the sites where it says its caches of weapons, explosives and ammunition are hidden.
ETA, which killed more than 850 people in its attempt to carve out an independent state in northern Spain and southwest France, declared a ceasefire in 2011 but did not disarm.
Founded in 1959 out of anger among Basques at political and cultural repression under General Francisco Franco, ETA (Euskadi Ta Askatasuna - Basque Country and Freedom) gained notoriety as one of Europe's most intractable separatist groups.
The Spanish government said ETA's handover of weapons in the French city of Bayonne was positive but insufficient and called on the group to formally dissolve and apologise to its victims.
ETA's disarmament ends an era of political violence in Western Europe, but comes as nationalism is stirring across the continent, with Scotland and the Spanish region of Catalonia seeking independence referendums, while Sinn Fein has urged a vote on taking Northern Ireland out of Britain.
ETA said in a letter to the BBC earlier this week it had handed over its weapons and explosives to civilian go-betweens who would deliver them to authorities.
The mediators - known as "The Artisans of Peace" - passed authorities a list with the coordinates for eight sites where ETA had stored its weapons arsenal, their representative, Michel Tubiana, told reporters in Bayonne.
The caches contain 120 firearms, about 3 tonnes of explosives and several thousand rounds of ammunition, he said.
Security forces were now searching the sites to neutralize the explosives and secure the weapons, French Interior Minister Matthias Fekl said at a news conference in Paris. Police were photographed carrying out bags from sites around Bayonne.
A Spanish government source said Madrid did not believe the group would hand over all its arms, while Spain's state prosecutor has asked the High Court to examine those surrendered as possible murder weapons used in hundreds of unresolved cases.
ETA's disarmament entailed no impunity for their crimes and they should not expect any favourable treatment, the government said in a statement.
"The actions carried out today by the terrorist group are nothing more than the result of their definitive defeat," Interior Minister Juan Ignacio Zoido told reporters in Madrid.
Arnaldo Otegi, leader of Basque pro-independence party EH Bildu who has served time in jail for his links with ETA, said in Bayonne that it was a day that would be welcomed by the great majority of Basques, although work was not finished.
"From today we will put on the table all the problems we still have as a society and a nation," he said, adding that the biggest issues were the around 300 ETA members still in Spanish and French prisons and the group's victims.
ETA's first known victim was a secret police chief in San Sebastian in 1968 and its last a French policemen shot in 2010.
It chose not to disarm when it called its truce, but has been weakened in the past decade after hundreds of its members were arrested and weapons seized in joint Spanish and French operations.
Popular revulsion at the scale of violent attacks carried out by Islamic militants had also played a part, Paddy Woodworth, who has written in depth about ETA, said.
"It had ceased to be an attractive organisation to join."
The group's first revolutionary gesture was to fly the banned 'ikurrina', the red and green Basque flag, before the campaign escalated in the 1960s into violence that was brutally reciprocated by the Franco regime.
In 1973, ETA targeted Franco's heir apparent Luis Carrero Blanco by digging a tunnel under the road that he drove down daily to attend Mass. They packed the tunnel with explosives and blasted Blanco's car over a five-storey building.
The assassination changed the course of Spanish history, as the removal of Franco's successor led to the exiled king reclaiming the throne and a shift to a constitutional monarchy.
Attacks including a 1987 car bomb at a Barcelona supermarket, which killed 21 including a pregnant woman and two children, horrified Spaniards and drew international outrage.
Gorka Landaburu, who lost his thumb and was left blind in one eye after an ETA letter bomb detonated in his home in 2001, welcomed the disarmament and said lessons had been learned.
"This must never happen again in our country," he said, standing by the sea in the Basque resort of San Sebastian. "I hope no one ever picks up pistols and bombs to defend an ideology ever again." (Additional reporting by Vincent West in Bayonne, Bate Felix in Paris and Robert Hetz in Madrid; Writing by Angus Berwick; Editing by Alexander Smith)