PARIS Activity in France's dominant services sector fell in June for the first time since January, a survey showed on Wednesday, as weak demand added to fears the euro zone's second-biggest economy could have contracted in the second quarter.

The HCOB France final purchasing managers index (PMI) for June for the services sector, compiled by S&P Global, fell to 48.0 points from 52.5 in the previous month, matching an earlier flash estimate.

Any figure above 50 points indicates an expansion in activity.

"It could well be that GDP in France declines in the second quarter, as the service sector accounts for the largest share of French economic output," said Norman Liebke, economist at Hamburg Commercial Bank AG (HCOB).

Output was hampered by an accelerated demand slowdown, the survey said, adding that interviewed managers mentioned increased borrowing costs, inflation and growing reluctance among clients as reasons for the downturn.

The French central bank had said last month the economy was on course to avoid a recession this year while inflation pressures eased, though growth would only gradually pick up in the coming two years.

It said the French economy would grow 0.1% in the current quarter from the previous three months and 0.2% in both the third and fourth quarters.

(Reporting by Tassilo Hummel; Editing by Toby Chopra)