"I condemn this barbarous act, this odious act which has put an end to the life of an innocent man," the French leader said in a television address on Monday. He warned all French nationals against travelling in the Sahel region.
Sarkozy says he has instructed his defence and foreign ministers to take steps to prepare France's response.
On Sunday, Al-Qaeda in North Africa claimed it had executed the 78-year-old in an audio statement broadcast by the TV channel Al Jazeera.
On 11 July, the Al-Qaeda militants gave France a 15-day deadline to help secure the release of its members in the region, warning that the hostage would be killed if Paris failed to comply.
As the deadline loomed, Mauritanian troops backed by the French army launched a cross-border raid on a remote Al-Qaeda camp in the Malian desert to rescue the hostage on Thursday. But no sign of Germaneau was found during the operation.
On Sunday evening, a French official told AFP news agency that Paris was “sure” that Germaneau “had died a couple of weeks ago”.
Germaneau has said he suffered from a serious heart illness and was struggling with the heat in a taped message released by Al-Qaeda.
The retired engineer was working with an aid organisation to improve health services and schools at the time of his kidnap in Niger in April.