New car sales in Italy, Europe’s fourth largest market, fell 1.9% in July, the smallest monthly fall for 28 months, fuelling expectation that the market might be stabilising after five years of decline.

The 1.9% decline in July to 107,514 vehicles followed a fall of 5.5% in June. Total sales in 2012 were down 19.8%.

Meanwhile both France and Spain have reported rising sales in July – in France light-vehicle registrations rose 1.2% from the same period a year earlier to 181,576 and in Spain sales rose for the first time in two months in July, climbing 14.8% to 75,000 units, helped by a government-backed scrappage scheme.