Bank of France Confidence Index Slips to Lowest in Five Years

By Helene Fouquet

July 15 (Bloomberg) -- The Bank of France said its index of manufacturing confidence fell to the lowest in five years in June and reiterated that the economy will growth at the slowest pace in almost two years in the second quarter.

The confidence index for the month of June declined to 95, the lowest since July 2003, from a revised 96 in May, the Paris- based central bank said today in a statement. The bank reiterated its previous forecast of a 0.2 percent expansion in the three months through June, the slowest since the third quarter of 2006.

``Industrial activity remained stable,'' the central bank said. ``Growth carried over for 2008 at the end of the second quarter is expected to stand at 1.3 percent.''

Finance Minister Christine Lagarde said that French economic growth would be on the lower end of the government's current forecast. The economy will expand at least 1.7 percent this year, at the bottom of the government's predicted range of 1.7 percent to 2 percent.

``We'll be on the lower end of the scale because our economy is undergoing external shocks such as a massive increase of oil prices,'' Lagarde said on Europe1 radio today.

France is feeling the pinch from a U.S.-led slowdown in global growth. In March, Prime Minister Francois Fillon reduced his growth forecast for 2008 to between 1.7 percent and 2 percent from ``close to 2 percent.''

To contact the reporter on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.ne.