December 28, 2012 / 9:06 AM / 5 years ago

UPDATE 1-France adjusts down Q3 GDP growth to 0.1 pct

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PARIS, Dec 28 (Reuters) - France trimmed its third-quarter growth reading to 0.1 percent from 0.2 percent previously, yet the timid return to positive territory provided some comfort as the country struggles to revive exports and stem job losses.

The INSEE national statistics institute also adjusted its prediction for full-year 2012 gross domestic product growth to 0.1 percent from 0.2 percent previously in its release of final GDP data.

The return to growth in the third quarter, as household consumption bounced back, came after a 0.1 percent dip in second-quarter GDP and confounded initial expectations that Europe's No. 2 economy could enter recession by the end of the year.

Consumer spending rose 0.2 percent in November in inflation-adjusted terms, other INSEE data showed, beating expectations for zero growth and bouncing back from a 0.1 percent dip in October. The rise was mainly due to higher spending on household furnishings and energy.

BNP Paribas economist Dominique Barbet said that while the GDP revision was bad news, the retail sales rise was a nice surprise. "Despite the revision, we continue to forecast the full year (GDP) growth at 0.1 percent, although the risk is now greater to get a lower figure than a higher one," he said.

Socialist President Francois Hollande is banking on growth of 0.8 percent next year - a level most analysts view as over-optimistic - to meet a public deficit target that is being seen as a test of his fiscal credibility.

INSEE predicted last week that the economy would grow a meagre 0.1 percent in the first and second quarters of next year after likely growth of 0.1 percent this year, a level that is below the government's 0.3 percent target and down from 1.7 percent growth in 2011.

With a sickly industrial sector holding back exports and high unemployment weighing on household spending, France's 2 trillion-euro economy had not posted positive growth since the third quarter of 2011.

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