UPDATE 2-French Sept new car sales up 8.4 pct

(Adds Italy September sales data)

PARIS Oct 1 (Reuters) - French new passenger car sales rose 8.4 percent in September over the same month last year for a rise of 3.4 percent in the first nine months of the year, defying a downturn in the rest of Europe amid consumer tax breaks, carmakers said on Wednesday.

The rise represents a turnaround after a 7 percent drop in August but still equates to a 1.4 percent fall from September last year when adjusted for the number of working days.

Renault (RENA.PA) group boosted its sales 19.9 percent while also gaining market share, and rival PSA Peugeot Citroen (PEUP.PA) lifted its sales 4.9 percent while seeing its market-leading share slip one percentage point to 31.7 percent.

Volume gainers among foreign manufacturers in September included Ford (F.N) group, up 24.2 percent, Fiat (FIA.MI) which rose 46.7 percent and Nissan which boosted sales 30.9 percent.

GM Europe (GM.N) volumes fell 8.6 percent, BMW (BMWG.DE) fell 8.1 percent while remaining up 11.8 percent over the first nine months, and Mercedes (DAIGn.DE) fell 8.4 percent.

The figures were provided by French carmakers' association CCFA as European car stocks sank on evidence that consumers are increasingly struggling to raise loans to buy cars [ID:nL1672893].

Auto stocks dominated the list of European blue-chip decliners, led by Daimler, which continued to fall despite denying rumours of a profit warning [ID:nWEA1476].

French car sales have been relatively supported by a scheme encouraging ownership of less polluting vehicles, which tend to be the type of small cars in which French carmakers have a strong share.

September figures looked bleaker across other parts of Europe and do not yet fully reflect the recent banking crisis.

In Spain, car sales fell 32 percent in September, marking the fifth straight month of decline amid a severe economic slowdown, data showed on Wednesday. [ID:nMDT005630]

In Italy, new car sales fell for the ninth month in a row in September, down 5.51 percent. However, the fall was less severe than August's 26.42 percent drop. [nMAT008639]

Britain and Spain have seen sales falling for several months due in part to a high proportion of variable-rate mortgages, which affect auto purchases by cutting into budgets available for other big-ticket items when home loan costs are tightened.

U.S. sales data due later on Wednesday was expected to show unit volumes in the industry declined in September to close to a 15-year low. [ID:nN30450222]. (Reporting by Tim Hepher; Editing by David Cowell)