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UPDATE 1-Lagardere halts production of Renault Avantime car

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PARIS, Feb 26 (Reuters) - France's Lagardere said on Wednesday it was halting production of Renault's Avantime car, calling the futuristic coupe a commercial failure.

The decision by Lagardere, whose Matra Automobile unit assembles the Avantime for Renault, effectively puts an end to the media firm's automobile business.

Lagardere said that in December orders for the car averaged only 15 per day, and that despite a marketing drive and launches of other models in the same range, sales were well below target.

The firm, which earlier this week sold its stake in the French carmaker and said this confirmed it was pulling out of the autos business, said in a statement it was halting production following "the commercial failure" of the car.

"This decision also drives Matra Automobile to end its activity in auto construction," Lagardere said in a statement.

Renault was not immediately available to comment.

Last year Renault grabbed back production of its Espace van from Matra, leaving the Lagardere unit with only the Avantime coupe to manufacture at its plant at Romarantin in central France.

The firm, which said it would honour contractual obligations with Avantime and Espace clients, adding it would also do its utmost to preserve jobs at its Matra factories -- which saw sales slump 31 percent in 2002.

The quirky Avantime, the flag bearer of Renault's bold new take on design that spawned the new love-it-or-hate-it Megane and the Vel Satis hatchback luxury saloon, has had lacklustre sales.

But Renault has repeatedly stressed it will persevere with the luxury model and it is now expected to transfer production to one of its own factories.

Lagardere, which on Monday said it was selling its 1.26 percent stake in Renault for 38.95 euros a share, is expected to announce the sale of the car assembly unit shortly.

Lagardere was one of a group of French firms that snapped up Renault stock in 1995 when its shares were sold on the market.

Lagardere has assembled a number of vehicles for Europe's fourth-largest carmaker through Matra, which has been up for sale for a while. It had hoped to sell the division by the end of last year, but analysts are now expecting news on this before the end of this month.

Last week, Lagardere chief Jean-Luc Lagardere resigned from the board of Renault in a move many viewed as a prelude to a more formal split.

Problems linked to the Avantime have been accompanied by media reports of a sour relationship between the two firms.

Lagardere was for years an aerospace and engineering group that also owned a magazine business, but has been metamorphosing into a pure media group in recent years under the direction of Jean-Luc's son Arnaud Lagardere.