PSA Peugeot Citroen is aiming for a full-year loss in 2009 closer to the top end of its earnings guidance, thanks to the improved outlook for car sales in its main markets, chief executive Philippe Varin said in Frankfurt.

PSA earlier this year expected to post a loss of between EUR1bn and EUR2bn. Varin told Dow Jones the world car market was likely to fall by 10% or possibly slightly less this year compared to 2008.

“We see a recovery in the second half of 2010,” he said.

Varin also said PSA was talking to BMW about possibly expanding cooperation on the development of new petrol engines. The two automakers share a line that is used by several brands including Mini.

The CEO added this could be expanded to include a range of new, small petrol engines that Peugeot Citroen is currently developing.

Varin also said the company was interested in broadening ties with other car manufacturers.