WRAPUP 2-European new car sales beat a slower retreat

PARIS/MADRID Aug 1 (Reuters) - * Sales fall 5.9 pct in France, 4 pct in Spain

* Rate of decline slowed markedly from June

(Adds Italy, Belgium figures)

PARIS/MADRID, Aug 1 (Reuters) - European new car sales showed signs in July they might soon emerge from a long, steep fall as the boost from government incentive schemes begins to work its way out of comparative figures.

Weak economies and supply problems still dogged the industry but the rate of decline slowed markedly from June.

French car passenger sales fell 5.9 percent, following a 12.6 percent drop in June and marking the fourth consecutive month of declines.

Spanish new car registrations fell 4 percent, compared with a 24 percent drop in registrations in July 2010 when the subsidy programme ended.

There have been signs that Asian and U.S. car markets are slowly returning to health, but analysts said it was too early to say the same for Europe.

"Certainly there's no growth, but in most markets the comparisons are getting easier," said Philippe Houchois at UBS.

A spokesman for France's CCFA car makers' association said it was expecting a drop of 8 to 10 percent over the year while the Spanish car association ANFAC saw no signs of improvement in the market for the remainder of the year, nor for 2012.

"I think we will see a certain stabilisation now, but at these low levels, in line with the trend in the Spanish economy of very little growth," said Nicolas Lopez, MG Valores analyst in Madrid.

"I don't think we can expect (new car registrations) to fall much further ... the main declines started last year with the withdrawal of subsidies and the rise in VAT."

Italian new car sales were 137,422 units, down 10.69 percent from July last year, the transport ministry said, continuing a downward trend from last month. , while Belgian new car registrations fell 11.25 percent.

New car sales in the European Union suffered their biggest drop in eight months in June, data from industry association ACEA showed last month.

In addition to economic uncertainties, the earthquake and tsunami that devastated Japan in March also had a knock-on effect on the global automotive industry, as many electronics suppliers' factories were damaged. Surging raw materials prices have added to carmakers' headaches.

Data from Tokyo earlier on Monday showed that new vehicle sales in Japan fell by a record in July, battered by production disruptions from the March 11 earthquake.

However, Japanese carmakers are recovering production faster than expected. Honda Motor avoided an expected quarterly loss and raised its annual profit guidance by more than a third, while Nissan Motor last week reported a smaller than expected decline in quarterly profit.

The U.S. auto industry is also improving; sales for July due to be published later are expected to hit an annual rate of around 12 million vehicles, an improvement over May and June, though still some way off the 17 million-plus sold in 2000.

France's Renault said last month that supply difficulties that weighed on its sales in recent months -- related to problems with suppliers ramping up capacity after the financial crisis -- should start to ease from July.

German sportscar maker Porsche AG said on Monday it still expected a significant double-digit operating margin this year after demand for luxury cars in China and North America boosted quarterly earnings.

Carmakers have been relying on stronger demand in emerging markets including the BRIC nations of Brazil, Russia, India and China, but there are signs this growth is starting to cool.

India's Tata Motors Ltd said July vehicle sales dropped 6 percent from last year's figure, while domestic sales fell 9 percent. (Reporting by Astrid Wendlandt, Gilles Gillaume and Judy MacInnes and Ben Deighton; writing by Sophie Walker; Editing by David Cowell)