PARIS (Reuters) - European car sales rose 9.5 percent last month, regional industry association ACEA said on Thursday, with recovering southern markets benefiting Fiat <FCHA.MI> and low-cost brands.

Registrations rose to 855,466 cars in August, a seasonally slow holiday month, from 781,575 a year earlier, the Brussels-based Association of European Carmakers said in a statement.

Fiat Chrysler <FCHA.MI> posted the biggest gain among major carmakers with a 20 percent sales increase, helped by a similarly rise in Italy and nearly 15 percent growth in Spain.

Spanish-based budget brand SEAT recorded an 18 percent increase in European registrations, contributing to parent group Volkswagen's <VOWG_p.DE> 6.3 percent advance.

Sales by France's PSA <PEUP.PA> rose a lackluster 2.8 percent, with the Peugeot brand in line with VW, but Citroen and DS showing declines. Domestic rival Renault <RENA.PA> gained almost 15 percent, with its no-frills Dacia sales up 40 percent.

(Reporting by Laurence Frost; editing by David Clarke)