UPDATE 1-France seen dodging recession -central bank

(Adds budget figures, detail)

PARIS, Feb 8 (Reuters) - France's central bank said on Friday it expected the euro zone's second-biggest economy to grow 0.1 percent in the first quarter of 2013, a more upbeat prediction than those of many economists who see the country slipping into recession.

"Forecasts point towards a modest rise in (industrial) activity in February," the Bank of France said in a monthly report, adding that the services sector was also likely to see an upturn.

The Bank of France's estimate was its first forecast for the period and could still be revised in subsequent monthly surveys.

Economists are more pessimistic after recent weak data including a January survey of purchasing managers, which showed the sharpest fall in manufacturing output since March 2009, contrasting with data for the wider euro zone, which showed the bloc had turned a corner.

The Bank of France's business confidence indicator for industry, however, rose to the highest since March 2012. The reading for services was stable, albeit at a low level.

Economists in a recent Reuters poll forecast the French economy would shrink by 0.2 percent in the fourth quarter of 2012 and contract 0.1 percent in the first quarter of this year, pushing it into recession - defined as two consecutive quarters of falling output.

Initial figures for fourth quarter GDP are out on Feb. 14.

Even if France manages to skirt a recession, the Bank of France's forecast is still modest, meaning the country will need to pick up momentum if it is to meet the government's official forecast for 0.8 percent growth this year.

Most economists see a rate closer to zero, casting doubts over the country's ability to meet its target of cutting its budget deficit to 3.0 percent of GDP by the end of this year.

Separate data released on Friday confirmed the central government deficit, which makes up the bulk of the budget deficit, stood at 87.2 billion euros for 2012, exceeding the official target for 86.2 billion euros.

Meanwhile, analysts polled by Reuters see the deficit at 3.6 percent of GDP at the end of 2013, above the EU's official 3 percent limit and leaving the government with little choice but to implement further austerity or renegotiate its deficit targets with the European Union.

(Reporting By Vicky Buffery; Editing by Leigh Thomas and Susan Fenton)