The forecast, the bank's first for the July-September period, puts French growth at half the pace of the euro zone as a whole and underlines concerns that France is stuck in a rut following a spurt of 0.9 percent in the first quarter.

The French government forecasts the economy will grow 2.0 percent in 2011 and 2.25 percent in 2012, but many analysts are more downbeat for next year.

France will publish its second-quarter GDP data on Friday.

France and Germany have been propping up the euro zone's tepid growth rate, and a slowdown in its second largest economy would drag the bloc closer to recession as it struggles to keep a lid on an escalating sovereign debt crisis.

The Bank of France's monthly survey showed French industrial activity posted a slight increase in July, underpinned by the transport equipment sector.

A slowdown in service sector activity seen in June continued in July, notably in the information and communication businesses.

The central bank's business sentiment indicators slipped again, to 98 from 99, in both the industry and service sectors. Both indicators are below their long-term averages.

A drop in order book levels observed in June continued in July, although inventories of final goods were at normal levels.

Many European economies are struggling to keep growing as big debt burdens force them to slash public spending.

Copyright Reuters, 2010