Fiat jumps after chief resigns

MILAN, Italy (CNN) -- Fiat shares jumped more than 4 percent on Tuesday after the carmaker's chief executive resigned amid slumping sales and increasing losses.

The departure of Paolo Cantarella, announced late on Monday, came as credit agency Standard & Poor's reaffirmed its "A-3" rating on Fiat's debt, after warning earlier that it might downgrade it.

S&P said recent decisions by Fiat would have a "material effect" on group's cashflow.

Fiat, Italy's largest industrial group, rose 4.4 percent to 13.48 euros in Milan on Tuesday. Its shares have fallen nearly 30 percent so far this year.

Cantarella, who will be replaced by Fiat Chairman Paolo Fresco, said he was leaving to enable the group to get a fresh start to its restructuring plan.

"After thinking about it for a long time, I decided that at this complex time for the group, and for Fiat Auto in particular, there had to be a strong break," Cantarella said in a statement.

Fiat has announced plans to layoff more than 3,000 workers, sell assets and float its sports car business Ferrari in an effort to reduce its 6.6 billion euro ($6.2 billion) debt.

The group's main creditor banks -- Banca di Roma SpA, IntesaBCI, Sanpaolo IMI -- have also agreed to a 3 billion euro finance package and said they could take control of the financial services unit of the loss-making Fiat Auto division.

There has also been growing speculation that Fiat -- which posted a first quarter loss of 529 million euros -- may be forced to sell its 80 percent stake in Fiat Auto, which has been the biggest drain on the group's finances.

Fiat has an option to sell its stake to General Motors from 2004. GM bought the other 20 percent of Fiat Auto two years ago.

The car unit has seen its market share slide as competition and the global economic slowdown cut into sales.

Fiat's sales in Italy fell 16.8 percent to 64,950 units in May from a year earlier, the Transport Ministry said last week, pushing the group's market share down to 31.06 percent from 33.22 percent year-on-year.

The group -- known for the Alfa Romeo, Lancia and Ferrari brands -- has also seen its European market share decline, falling to 7.8 percent from 10 percent a year earlier.