The pace of growth in the euro zone's dominant service sector eased slightly in June, but strong consumer demand in France helped to limit the downside, a survey of about 2,000 companies showed yesterday.

The NTC Research Euro Zone Business Activity Index edged lower to 53.1 in June from May's seven-month high of 53.5.

The data, due to be published today, was inadvertently released ahead of schedule.

The headline index came in below a consensus forecast of 53.4, but stayed above the 50 waterline between growth and contraction for the 24th month running.

"The consumer sectors of France and, to a lesser extent, Germany, were key drivers of growth in the services sector," said Chris Williamson, chief economist at NTC Research. "With this and the manufacturing data, we are looking at a slight slowdown in growth in the second quarter."

A companion survey released last Friday showed the euro zone manufacturing sector contracted for a third month, though the pace of the slowdown eased thanks to a weaker euro. The NTC Research Euro Zone Purchasing Managers' Index (PMI) rose to 49.9 in June from May's 48.7.

Mr Williamson said the PMI's implied second-quarter GDP growth of 0.3 per cent quarter-on-quarter, after 0.5 per cent in the first quarter, suggesting full-year growth of between one and 1.5 per cent.

The European Central Bank (ECB) estimates that the 12-nation euro zone will have GDP growth of 1.4 per cent this year. "A contraction in GDP still looks improbable and, while that's the case, then we'll probably see much the same attitude from the ECB that we've seen in recent months," said Ken Wattret at BNP Paribas.

"The central bank's view is still one of upside risk to inflation and, while that's the case, rates are on hold."

Most economists expect the ECB to leave rates at a historic low of two per cent at its next meeting on Thursday and for the rest of this year.

Italy, the euro zone's third biggest economy, is in a technical recession and Mr Williamson said its PMI data was consistent with the economy having contracted between April and June.

The Italian services PMI came in at 48.9 in June, up from May's 47.3, which was the lowest reading in the survey's seven and a half year history.

But the index stayed below 50 for the third month, as new business levels fell and firms were forced to continue cutting prices and staff.

"[The Italian PMI] matches all the data we've seen of late coming from Italy. They are going through a very difficult period in terms of the real economy," said Holger Fahrinkrug at UBS in Frankfurt.

In Germany, the PMI slipped to 52.3 in June from 52.6, but it was the only country to see an improvement in the rate of new business compared to May.

France enjoyed stronger services growth than Italy, Germany and Spain for the ninth month.

A report on the Republic's services sector is expected to be released today. - (Reuters)