PARIS, Feb. 18-- The Peugeot family, the largest shareholder in PSA Peugeot Citroen, approved a recapitalisation deal under which the French state and Chinese partner Dongfeng would both have 14 percent stake in the group, according to local media reports.

The boards of the Peugeot family holding Etablissements Peugeot Freres and its FFP subsidiary gave the green light late on Monday to raise PSA's capital by 3 billion euros (4.11 billion U.S. dollars).

The aim is to bolster the loss-making company's financial assets and help the firm preserve its market shares and boost sales, the report said.

In a two-stage capital operation, the French government and the Chinese company Dongfeng will each inject 750 million euros. The remaining 1.5 billion euros would be garnered via additional public floatations.

The tie-up with China's second-biggest carmaker was scheduled to be announced on Wednesday, according to the report.

Paralyzed by poor competitiveness and sluggish sales, PSA said it would cut 8,000 jobs and close one factory in France as part of a restructuring plan.

Last year, France's leading auto manufacturer reported a 4.9-percent-decline in its worldwide sales to 2.82 million units due to persistent falling sales in Europe where it sold 7.3 percent fewer vehicles.