(Adds budget data, details, quotes)
By Vicky Buffery
PARIS, May 12 (Reuters) - The French economy is expected to shrink at a slower pace in the second quarter of 2009, the Bank of France said in its latest survey on Tuesday.
Giving its first estimate for the quarter, the central bank said gross domestic product (GDP) will contract by 0.6 percent between April and June.
First quarter GDP data is due on Friday with a Reuters poll in April pointing to a contraction of 1.2 percent. A previous Bank of France survey predicted a 0.8 percent decline over the first three months of the year.
Tuesday's survey said the fall in industrial activity in April was more limited than in previous months, with production receding at a slower rate across all sectors, particularly in intermediate goods.
The outlook for the sector was also beginning to improve, pushing the bank's industry sentiment indicator up to 75 for the month, compared to 74 in March, but orders remained weak.
"The flow of new orders continued to slacken both in France and from abroad, albeit at a slower pace than in the previous month. Order books are still deemed to be far below targeted levels," the Bank of France said.
The central bank survey tallied with other recent reports suggesting the euro zone's second largest economy might have touched bottom.
The Paris-based Organisation for Economic Co-Operation (OECD) said on Monday there were now "tentative signs" of a pause in the slowdown in France, Italy and Britain.
Data released on Tuesday revealed the damage inflicted on state accounts by the worst slowdown since World War Two.
The government said its 2009 budget deficit soared to 43.7 billion euros ($59.6 billion) by the end of March against 22.5 billion at the same point last year.
Stimulus measures aimed at boosting the sagging economy accounted for 13.1 billion euros of the deficit, the budget ministry said in a statement. It added that government revenues, including tax receipts, plunged 26 percent in the first quarter.
French Economy Minister Christine Lagarde said on Monday the economy had suffered "an extremely brutal shock" and predicted the first quarter GDP figures would be "undoubtedly bad".
While the Bank of France saw a slight upturn in industrial sentiment, it said the service sector remained mired in gloom.
"...Demand registered a further significant decline. Both prices and staff levels continued to fall, in line with the trend observed over the previous months," it said.
"The outlook for activity in the coming months remains to the downside, in particular in business services," it added. For a table on the budget deficit please double click on: [ID:nPAB004785] For stories on the economy and/or politics please double click on: [(FRANCE OR FRENCH OR PARIS OR SARKOZY)-(M OR G)]
(Reporting by Vicky Buffery, editing by Crispian Balmer)