* French car registrations down 7 pct in July
* Peugeot and Renault outpace French decline
* Spanish registrations down 17 pct, Seat plunges
* Italian registrations down 21 pct
By Laurence Frost
PARIS, Aug 1 (Reuters) - Car registrations in France, Spain and Italy extended their decline in July as consumers cut back on costly goods in the face of economic uncertainty, with local brands often losing more ground to foreign rivals.
French registrations fell 7 percent, outpaced by plunging sales at PSA Peugeot Citroen and Renault as Volkswagen and Hyundai-Kia wooed the dwindling pool of drivers persuaded by rampant auto discounting to splash out.
The ninth straight monthly decline was a "poor result" despite two more sales days than in July 2011, the French CCFA automakers' association said on Wednesday.
Spain, one of the countries worst hit by Europe's debt crisis, posted a further 17-percent drop in car sales last month. Consumer registrations have now been in uninterrupted decline for more than two years, industry body ANFAC said.
"That trend will not change in the short term even though the discounts on offer are about the best in history," the organisation's chief economist Aranzazu Mur said.
Mur blamed "the lack of consumer confidence tied to the economic downturn, high unemployment and difficult access to financing" for the ongoing sales slump.
Sales by Seat, the Volkswagen-owned brand manufactured in Martorell, Spain, plunged 35 percent at home.
Peugeot, which dropped 30 percent in Spain, mirrored Seat's domestic performance with a 13 percent decline for its namesake brand in France, almost double the market contraction. Citroen sales fell 6.8 percent in France and 12 percent in Spain.
The sales slide for Paris-based Peugeot, which is cutting more than 10,000 jobs and closing a plant to stem mounting losses, came despite a recent update to its key 208 small car.
Domestic rival Renault's 27 percent plunge was softened by a doubling of low-cost car sales by the Romanian- and Moroccan-built Dacia range, steering the group to an 11 percent French decline.
South Korea's Hyundai and affiliate Kia bucked both markets with a 6.7 percent Spanish sales increase and a 37 percent surge in France - where the Volkswagen group also posted a 1.1 percent gain.
That lifted Europe's No.1 car maker Volkswagen to a 13.7 percent share of the French market for the first seven months, from 12.2 percent in the year-earlier period.
Fiat and the U.S. automakers also lost ground in France, recording declines of 26 percent for General Motors' Opel division, 18 percent for Ford and 19 percent for the Italian group.
Fiat's domestic sales fell in line with its home market's 21 percent contraction, the Italian UNRAE industry grouping also said on Wednesday.
Renault, Ford and GM posted the biggest Italian sales declines, while VW and Hyundai-Kia gained market share after their registrations fell 17 percent and gained 7.9 percent respectively.