French business confidence increased more than expected in April, the first increase after a series of declines in past several months, official data showed Thursday.

The statistical office INSEE said the business sentiment index rose to 71 in April from 68 recorded in March. Economists had expected the reading to edge up to 69.

As demand slowed due to the global economic slowdown, firms were forced to reduce production, investment and employees. The adverse economic conditions reduced the scope for businesses to grow.

In February, French Prime Minister Francois Fillon had announced an economic stimulus package worth EUR 26 billion or $33.1 for revitalizing the country's economy. There was another package of EUR 6.5 billion for the country's ailing carmakers in the same month.

As the stimulus measures have started taking effect, situations are improving slowly. The INSEE said the general production outlook indicator jumped to minus 18 from a revised minus 66 in the previous month, while the consensus forecast was for a reading of minus 67.

The gauge for personal production outlook rose to minus 35 from a revised minus 47. Economists had forecast an increase to minus 44.

On April 8, the Bank of France had said its business sentiment indicator for industries rose to 73 in March from February's revised reading of 71. The business sentiment indicator for French service sector stood at 76 in March 2009, after 78 in February.

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

Also on Thursday, reports said citing data from the Markit Economics that the flash Markit/CDAF composite purchasing managers' index, which includes both manufacturing and services sector, improved for the second straight month in April, though it is still below the 50 no-change mark.

The International Monetary Fund on Wednesday said in its world economic outlook that the French economy is forecast to contract 3% in 2009 and then to rise 0.4% in 2010.

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