France's central bank said on Monday it expected the euro zone's second largest economy to shrink by 0.1 percent in the fourth quarter, while in dustrial output unexpectedly shrank in October.

The Bank of France's quarter on quarter growth forecast repeated a prediction it made in October.

The bank also said its industrial climate indicator dipped a further 1 point to 91 in a November survey, while a similar measure of sentiment in the services sector held steady at 91.

French gross domestic product grew 0.2 percent in the third quarter, contrary to predictions that the economy would stagnate or even shrink, but economists said the outlook was gloomy.

In a separate report, national statistics office INSEE said industrial output dropped 0.7 percent in October, the first month of the final quarter, following a 2.7 percent drop in September.

The October figure was weaker than expected, as economists polled by Reuters had predicted a 0.3 percent rise.

In a sign of weakness in the euro zone's top economy. Germany's trade surplus narrowed in October to its lowest level in over half a year as exports posted meagre growth in the face of weakening demand from the country's recession-hit European partners. - Reuters