* World No. 2 truckmaker's Q2 loss worse than expected
* Still sees sharp 2009 declines in U.S., European mkts
* French parts firm to cut costs; sees no upturn this yr
* Continental AG plans 1 bln eur capital hike -report
* Auto sectors trades in line with market
Leading truckmaker Volvo (VOLVb.ST) and parts manufacturer Faurecia (EPED.PA) posted steep losses and warned of further pain across the auto sector in coming months, with no upturn likely before 2010.
France's Faurecia said on Tuesday it would combat the downturn by slashing costs as cash bottlenecks that have dogged the industry also impacted Continental AG, with a newspaper reporting the German auto supplier plans a 1 billion euros ($1.42 billion) capital increase. [nN20120809] [nLL714676]
Volvo, the world's number two truck maker, skidded to a worse-than-expected operating loss of 6.9 billion crowns ($886 million), down from a 7.2 billion profit a year ago and stood by its forecast that the economic downturn would see its main, recession-hit U.S. and European markets shrivel this year.
But in contrast to others in the sector, succeeded in cutting inventories as it adjusted to dwindling demand, significantly slowing the drain of cash from the group.
I think that market expectations were for a much more negative cash flow, Handelsbanken analyst Hampus Engellau said.
At 0939 GMT, Volvo shares were up 0.5 percent at 53.25 Swedish crowns while Faurecia shares were trading down 2 percent.
Faurecia said it expects sales to drop around 10 percent in Europe and 35 percent in North America in the rest of 2009, raising its cost-cutting target and predicting a very slow recovery. [nLL714676]
An unprecedented drop in auto production pushed the French firm to a first-half operating loss of 187 million euros.
Swedish rival Autoliv (ALIVsdb.ST), the world's top airbag and seatbelt maker, is seen swinging to a pretax loss of $74 million in the second quarter according to a Reuters poll. The firm's results are due at 1000 GMT. [nLE554097] Swedish truckmaker Scania and Italian carmaker Fiat report earnings later this week.
Predicting tough months ahead, Faurecia Chief Executive Yann Delabriere told BFM radio: We feel that the recovery in 2010 will be very slow, and very gradual. The firm's shares fell 1.9 percent.
Continental CEO Thomas Neumann plans to give his heavily indebted company room for manoeuvre by seeking boardroom approval for a capital hike at the end of July, Financial Times Deutschland reported without naming sources. [nN20120809]
The German auto supplier, whose shares fell 5 percent, declined to comment. Also in Germany, the Opel takeover saga showed no signs of a swift resolution as a government source said a meeting on Wednesday between U.S. parent General Motors and German government officials would not yield a decision on a winning bidder. [nBAT003079]
The DJ Stoxx auto sector was up 0.7 percent, broadly in line with the overall market. ($1=.7063 euros) ($1=7.790 Swedish crowns) (Additional reporting by Anna Ringstrom, Marilyn Gerlach, Madeline Chambers; writing by John Stonestreet; editing by Mike Nesbit)