The King said Sarkozy had been a constant ally in the battle against terrorism “always making the victims the aim and end of your solidarity."
Spain credits Sarkozy with giving crucial aid in the fight against Eta, both as president and previously when he was French interior minister from 2002-2004 and 2005-2007.
Spanish and French police have cooperated closely in hunting Eta outlaws, who had once considered France as a safe haven. On Saturday, French police arrested three suspected Eta members near Auxerre in eastern France.
Eta announced on 20 October, the end of more than 40 years of shootings and bombings that killed 829 people. Its operations have been hammered by Spanish police working closely with France.
Spain's highest chivalric honour, the Order of the Golden Fleece was created in 1430 by Philip III, Duke of Burgundy, at the time of his marriage to Princess Isabella of Portugal.
Later on Monday, Sarkzoy is to hold talks with Spain's new conservative Prime Minister Mariano Rajoy, on Europe's economic crisis.
The two men meet just three days after Standard and Poor's cut its rating of nine debt-laden European countries, including France and Spain,
The Spanish government is battling to trim a bulging public deficit and regain battered market confidence and says plans to reform European Union treaties will be a key part of the Spain-France talks.