UPDATE 2-Volvo truck deliveries underscore European slowdown

(Adds analyst comment, share price)

By Niklas Pollard and Victoria Klesty

STOCKHOLM, Aug 27 (Reuters) - World number two truck maker Volvo (VOLVb.ST) said on Wednesday deliveries of its trucks rose 2 percent year-on-year in July, but shipments in its core European market fell, weighing on its shares.

The group, which sells trucks under the Renault, Nissan Diesel and Mack brands as well as its own name, said deliveries in its biggest market, Europe, fell 5 percent and were down 2 percent in North America.

Volvo shares opened lower following the release of the delivery data as investors eyed the declining shipments in Europe, which account for nearly half of the group's total deliveries, and were down 2.6 percent by 0806 GMT versus a 1.1 percent fall in Stockholm's blue chip index .OMXS30.

In Volvo's core western European market, deliveries were down 12 percent, the group said.

"The share reaction -- Volvo is down a bit more than the index -- is if anything a response to the development in Western Europe. That we would see these weak figures in North America was no surprise, of course," Nordea analyst Johan Trocme said.

In Asia, currently the firm's second-biggest market following the acquisition last year of Nissan Diesel, deliveries rose 16 percent from a year ago, Volvo said.

Kaupthing analyst Kenneth Toll said: "The trend in deliveries and in their comments are very much in line with the development we saw during the second quarter."

Volvo has forecast a 10 percent expansion of the European heavy-duty truck market this year but it expects the North American market to match a weak 2007 performance, held back by a deepening economic slowdown and soaring fuel prices.

Europe has so far been less affected by the economic downturn, although Volvo -- the world's second-biggest truck maker after Germany's Daimler AG (DAIGn.DE) -- noted in its second-quarter financial report that customers in the region had grown increasingly hesitant to place new orders.

Other truck makers, including Volvo's smaller domestic rival Scania (SCVb.ST), have reported similar trends emerging in a European market where last year robust demand left manufacturers straining to keep up with deliveries.

"The downturn regarding the economic situation in Europe, as well as high fuel prices, continues to affect the truck demand adversely," Volvo said. "The demand on the North American market remains at a low level."

In total, Volvo delivered 19,243 trucks in July.

(Reporting by Niklas Pollard; Editing by Sue Thomas and Erica Billingham)