French Business Confidence Stalls, Factory Output Drops: Economy.

French business confidence stagnated and factory output dropped, underlining the challenge the victor in the country’s presidential election will face in reviving economic growth.

A gauge of sentiment among factory executives was unchanged at 95 in March after dropping in February, the Bank of France said today. Manufacturing production fell 1.2 percent in February, a third month of declines, the national statistics office, Insee, said in Paris.

The data show how Europe’s second-largest economy is struggling to grow in the face of the region’s sovereign debt crisis, reducing the room for maneuver of President Nicolas Sarkozy and his Socialist challenger, Francois Hollande, as they seek to woo voters in the final weeks of the election campaign. The Bank of France said its surveys suggest that gross domestic product didn’t expand in the first quarter.

“The general message is this: the French economy is practically stalled,” said Michel Martinez, an economist at Societe Generale SA in Paris. “France doesn’t have the problems of its southern neighbors, but its industry remains in recession and we remain very far from a classic recovery scenario.”

The lack of growth at least partly reflects the impact on demand of budget cuts in neighboring Italy and Spain, as well as deficit-reduction efforts in France.