UPDATE 1-European car sales fall 10.2 percent in Feb

MILAN, March 19 (Reuters) - Europe's car market shrank a further 10.2 percent in February, with sales of new vehicles falling to 829,359, according to figures from the Association of European Car Manufacturers (ACEA).

Sales hit a 17-year low in 2012 and this year is shaping up to be another tough slog for mass-market carmakers as consumers in recession-hit European economies continue to postpone purchases.

Ford's sales dropped at twice the rate of the overall market's decline for a third straight month, dropping 20.8 percent to 53,660 cars. Ford is cutting back its European production capacity with three plant closures to stem regional losses.

General Motors and Fiat were the next biggest fallers, dropping 20.1 percent and 15.7 percent respectively.

Carmakers in Europe are still reeling from a terrible 2012. Mass-market manufacturers lost an estimated $7 billion in the region last year, Fiat Chief Executive Sergio Marchionne said at the Geneva car show this month.

European car sales fell 8.2 percent to 12.05 million vehicles last year.

Market forecaster LMC Automotive recently estimated that this year's sales would drop 3.1 percent in western European to 11.4 million vehicles, compared with about 12.8 million and 13 million in 2011 and 2010 respectively.

European market leader Volkswagen saw sales of its core VW brand fall nearly 10 percent and its luxury Audi brand decline 3.8 percent.

Only three brands managed to add sales in February. Korea's Hyundai, usually a bright spot, eked out a 1.4 percent gain. Mazda rose 13.1 percent and Honda 27 percent.

Another bright spot was the UK, where sales rose 7.9 percent.

"All other significant markets faced a downturn, ranging from 9.8 percent in Spain to 10.5 percent in Germany, 12.1 percent in France and 17.4 percent in Italy," the ACEA said in a statement.