* Q3 sales 8.102 bln euros, down 11.3 percent y/y
* Confirms FY positive free cashflow target
* Shares closed up 3.49 percent before sales published
(Adds details from statement, background)
PARIS, Oct 29 (Reuters) - Renault said positive trends carried over into the third quarter from the second and sales declined less sharply than earlier in the year.
The French carmaker said it would increase production by more than 50 percent in the fourth quarter, compared with the same period last year, when carmakers were forced to drastically slash production in the face of plunging demand.
The group confirmed its full-year target of generating positive free cash flow.
In February, Renault dropped an ambitious full year operating margin goal it had in place before the crisis, when -- like other carmakers -- its sales slumped towards the end of last year.
Renault said it was "well-positioned" to meet its target of a reduction in stocks of about 1 billion euros ($1.5 billion) for the year as a whole. The group's third quarter sales fell 11.3 percent year-on-year to 8.102 billion euros. Six analysts polled by Reuters journalists had expected an average of 8.363 billion euros for the sales.
Renault said the sales decline was more moderate than in previous quarters -- in the first quarter sales had fallen 30.8 percent year, and in the second quarter by 16.9 percent.
Rival French carmaker PSA Peugeot Citroen last week posted third quarter sales of 11.782 billion euros, as scrapping schemes boosted sales in major markets, meaning that the year-on-year decline of 7.7 percent was less sharp than in previous quarters.
(Reporting by Helen Massy-Beresford; Additional Reporting by Gilles Guillaume; Editing by David Cowell) ($1=.6785 Euro)