EUROPEAN car sales have fallen 7.9 percent in June on higher fuel prices and a slump in demand spreading north from Spain and Italy.

Japanese auto makers led the declines, Bloomberg News reported.

New car registrations dropped to 1,427,008 from 1,549,574 in June 2007, the Brussels-based European Automobile Manufacturers' Association said yesterday in a statement. Sales for the first half of the year slid 2 percent, passing the 0.7-percent contraction recorded in the first five months.

"Only France and Germany are holding up the EU market, but even growth in these two regions is beginning to slow," London-based Citigroup analysts Kristina Church and John Lawson said in a report to investors.

Car makers face a squeeze from surging oil prices and other raw materials cost on the one hand and flagging demand for new cars on the other. Consumer confidence sank to a three-year low last month in the 15 countries that share the euro, the European Commission said in June.

"Rising inflation and soaring fuel prices were among the main factors influencing new registrations," the European auto-industry body said in its statement.

Toyota Motor Corp suffered an 18-percent plunge to 68,961 registrations, extending May's 22-percent decline. Its share of overall sales slipped to 4.8 percent from the 6 percent it achieved last year as a whole.

Honda Motor Co fell 22 percent to 23,813 registrations, while South Korea's Kia fell 12 percent to 21,060.

Sales growth all but evaporated in Germany and France, which together had supported western European registrations in the first five months with gains of 4.2 percent and 5.2 percent.