UPDATE 1-PSA worldwide 2009 sales down 2.2 pct

* Auto markets to recover in 2010, except Europe

* H2 should however see "glimmers of improvement"

* European markets may see one-digit decline in demand

PARIS, Jan 11 (Reuters) - Europe's second biggest carmaker PSA Peugeot Citroen (PEUP.PA) said on Monday its full-year vehicle sales fell 2.2 percent, but scrapping incentive schemes launched last year cushioned the effects of a savage crisis, with the situation in Europe improving steadily during the year.

For 2010, markets were expected to show signs of recovery around the world, with the exception of Europe, which will be affected by the removal or phasing out of scrappage schemes.

"In this environment, PSA Peugeot Citroen believes that European markets may see an average one-digit decline in demand over the year," the statement said.

The group hopes to counter the expected decline in European market with the success of models launched in 2009 and with 2010 model introductions.

Governments stepped in to help ailing carmakers last year, launching scrapping incentive schemes in major markets to boost demand, as drivers received cash bonuses to trade in old cars. But with schemes coming to an end, or in some cases already finished, carmakers are facing the prospect of a bleak 2010. Jean-Marc Gales, head of the Peugeot and Citroen brands at the French carmaker, said on Friday that the auto industry was facing a difficult 2010. [ID:nLDE6071MA]

French full-year car sales published earlier this month showed a 10.7 percent year-on-year increase, while Germany, Europe's biggest car market, posted a 23 percent increase in the year as whole. The German government pledged 5 billion euros ($7.16 billion) to boost demand in a particularly generous scrapping scheme that sent car sales soaring, but funds ran out at the start of September. December car sales in Germany fell for the first time in 11 months, signalling a bleak 2010. [ID:nLDE6040M9] (Reporting by Dominique Vidalon; Editing by Hans Peters) ($1=.6983 Euro)