French carmaker PSA Peugeot Citroen on Wednesday reported a net loss of €962 million in the first half of the running year as global economic crisis affected the car sales adversely.

Europe's second-largest carmaker, PSA Peugeot Citroen believes that European car market will not be able to take a U-turn before the end of next year.

However, the loss was less-than-expected as analysts had projected a loss of €1.05 billion.

But, company's operating loss for the first half stood at €1.33 billion as compared with €839.5 million loss, projected earlier.

Company's sales plunged 20 percent, dragging down revenues 22 percent to €23.50 billion.

Company's Chinese sales dropped 3.7 percent.

Peugeot expects the European car market to shrink further by 7 percent in the second half of 2009.

Despite gloomy results and outlook, Peugeot said that the company received a free cash flow worth €467 million in the first half of 2009 owing to a drop of 31 percent in its inventory of unsold cars.

As per company's figures, Peugeot trimmed down its inventory to 431,000 unsold vehicles in the first half.

Shares of the company soared 3.5 percent in early trading.