Wednesday, the Bank of France said its business sentiment indicator for industries rose to 73 in March from February's revised reading of 71.

However, industrial activity contracted overall at a similar pace to the previous month. Production declined in all sectors. The capacity utilization rate, which fell slightly, hit a record low.

The flow of new orders slackened further on both domestic and foreign markets. Order books remained very much below normal levels. Inventories of final goods decreased, but remained above targeted levels, the central bank said.

Short-term forecasts point to a further drop in activity, particularly in the intermediate and capital goods industries. The decline in services activity has sharpened significantly compared with February. Prices and staff levels decreased further. The outlook for the coming months remains lackluster.

Further, the business sentiment indicator for French services stood at 76 in March 2009, after 78 in February.

Moreover, the central bank said its monthly indicator of economic activity signals that the economy would contract 0.8% in the first quarter, sharper than a 0.6% fall estimated in February.

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