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Fiat shares tumble on Chrysler news

2009-03-30 11:51

Shares in Italian auto giant Fiat tumbled on Monday after the US govenrment warned that its planned partner Chrysler faced an uncertain
future and reportedly set a deadline for a Fiat-Chrysler tie-up.

Fiat's shares fell 5.03% on the Milan stock exchange, which was sharply down by 3.89% overall.

A task force appointed by US President Barack Obama said Monday in agrim assessment that Chrysler faced a challenging future on its own and was unlikely to remain viable unless it manages to find a partner.

The US administration gave Chrysler 30 days to reach a deal with Fiat to qualify for more US government loans, the New York Times
reported Monday.

The two companies in January signed a preliminary deal for Fiat to take a 35% stake in Chrysler.

"In essence, the US administration is forcing Chrysler into an alliance with Fiat, but reversing the order: first an alliance and then, possibly, the funding," an analyst at Mediobanca was quoted as saying by Dow Jones Newswires.

"That implies more risk for Fiat, which would be taking a stake in a company in a worse financial state than previously thought, which could
improve if the government were to give it more funding."

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