Its turnover for the first six months of 1998 totalled 121.69 billion francs, up from 100.04 billion in the first half of 1997.

"This gain was due primarily to higher sales volumes, driven by the success of the Megane, the Clio II and the passenger car and light commercial vehicle versions of the Kangoo," Renault said.

Although industry analysts had expected strong half-year sales from Renault, they were impressed with the results and several analysts said they expected to boost their earnings estimates for the company.

The stock opened sharply higher and was up 3.13 per cent at 313 francs in early trading on the Paris bourse.

Renault's sales increase was steeper than the 17 per cent sales rise reported by European industry leader Volkswagen for the first half of 1998 and the 15 per cent gain posted by Renault's domestic rivalPSA Peugeot Citroen.

The rise in Renault's turnover exceeded a 17.4-per cent increase in its unit sales, signalling the company was gaining on its objective to improve its product mix and generate more sales outside the compact segment, where profit margins tend to be thin.

Renault embarked on the strategy two years ago with the launch of the mid-sized Megane, which has become the second most popular car in Europe. The trend-setting Scenic version, a passenger car sized minivan, is the best seller in the Megane family.

Renault also scored a hit with the Kangoo, launched last September. The quirky-looking vehicle is produced in two versions, one that competes with panel vans in the light commercial vehicle market and one for traditional car buyers.

"The bulk of the improvement was due to higher volumes, but there was also a positive impact from an improvement in the product mix," a Renault spokeswoman said.

Renault sold 1.12 million vehicles, including 1.07 million cars, in the first half of 1998.Turnover in the car division rose 21.24 per cent to 97.1 billion francs, helped by a recovery in the French car market, which grew 10.3 per cent in the first half.

Turnover in the trucks division rose 27.8 per cent to 20.36 billion francs, reflecting strength in the European truck market, and finance division sales rose 5.14 per cent to 4.2 billion francs.

Renault said it generated 62 per cent of its sales outside France, up from 61 per cent in the corresponding 1997 period.