(Adds shares, analyst quote)
By Rebecca Harrison
PARIS, April 25 (Reuters) - A clutch of funky new models at France's Renault failed to woo cautious European consumers in the first quarter, although the 2.9 percent sales drop was less than analysts feared and its stock nudged higher.
Renault also pleased the market on Friday with news its Japanese partner Nissan , which crowned a radical revamp with figures showing a 51 percent rise in operating profit in its just-ended business year this week, would contribute around 750 million euros to its first-half results.
Europe's fourth-largest auto firm holds a 44.4 percent stake in Nissan and the two have forged money-spinning industrial tie-ups.
Renault stock, which has lagged its sector by some 16 percent this year as investors fret it could fail to kickstart profits in a year when it should be nearing the zenith of its model cycle, gained 1.3 percent to 36.97 euros by 0725 GMT.
The European DJ Stoxx Autos index edged down 0.4 percent.
Renault said sales in the first three months of the year fell to 9.015 billion euros ($9.92 billion) from 9.285 billion a year ago.
Sales at Renault's core carmaking unit slipped 3.22 percent to 8.454 billion euros, while global unit sales fell seven percent like-for-like due to falling demand in western Europe.
MEGANE SALES STURDY
"The decline was primarily due to falling sales volumes in western Europe and the negative impact of the depreciation of the pound sterling, the Brazilian real and the Argentine peso," the company said in a statement.
Renault is banking on its new Megane models and its spinoffs to revive profits, which have sagged in recent years as rivals churned out flash new cars that left its own line up looking dowdy.
Renault said sales had suffered because it had not finished rolling out its new Megane range, including the new version of its popular Scenic minivan which have divided motorists with their love-it-or-hate-it cutaway back end.
Recent European new car sale figures have shown that sales of the Megane are sturdy, but falling demand for Renault's older models yanked down overall unit sales.
PSA Peugeot Citroen also added pressured with its recent Citroen models and on Thursday Renault's domestic rival bucked sagging European demand by reporting a three percent rise in first quarter sales.
"The Clio and Laguna suffered a bit with the market slowdown and with tough competition at Citroen, but the Megane is doing well," said Marc Gouget, autos analyst at BNP Paribas in Paris.
"This year is a transition year and we won't see the real benefits of the new range until 2004."
Elsewhere in the industry the picture has been glum.
Industry giant DaimlerChrysler , the first European carmaker to post quarterly numbers, kicked auto stocks lower on Thursday with a warning group revenues would fall in 2003 despite forecast-topping first-quarter operating profit.
Europe's biggest carmaker Volkswagen piled on the gloom, bracing shareholders for a large drop in first-quarter profit.
On a consistent accounting basis Renault sales fell 2.86 percent, the firm said in a statement.