Activity in France's services sector slowed in March, although the contraction was not as bad as first estimated, as sluggish demand hit business in the euro zone's second-biggest economy, a monthly survey showed on Thursday.

The HCOB final purchasing managers index (PMI) for the French services sector, compiled by S&P Global, edged down to 48.3 points in March from 48.4 in February.

The final March services PMI was a bit better than the flash March services PMI figure of 47.8 points, but the figure nevertheless remained below the 50 point line, signalling a contraction in activity.

The final March composite PMI - which comprises both the services and manufacturing sectors - stood at 48.3 points, up from 48.1 in February but also below the 50-point threshold.

"The global demand slump hampers French services. Surveyed service providers reported that new export business declined in March, particularly due to lower demand from Asia," said Hamburg Commercial Bank economist Norman Liebke.

"If demand increases in the coming months, there is not much that stays in the way of a recovery of the French economy," he added.

In March, France's INSEE official statistics agency forecast that the country would eke out economic growth of 0.3% in the second quarter, from zero growth in the first quarter. (Reporting by Sudip Kar-Gupta; Editing by Hugh Lawson)