General Motors, the world's largest car-maker, yesterday reported a net loss for the third quarter as a $2.2 billion (€2.24 billion) pre-tax write-down for its stake in Italy's troubled Fiat, which overshadowed a better-than-expected operating profit.

It also warned that rising pension costs meant it would take a "sizeable hit" on next year's cashflow. Aggressive use of financing incentives helped GM to a 59 per cent rise in earnings per share compared with the same quarter a year ago, but the write-down resulted in a net loss of $804 million, or minus $1.42 a share.

Without Fiat and other special items including its Hughes electronic unit, GM would have earned $615 million, or $1.20 a share, compared with 85 cents a share last year.

The results beat Wall Street expectations, and GM's shares were up 5.8 per cent at $35.20 in the early afternoon in New York.

The Detroit-based company declined to discuss speculation that GM and Fiat creditor banks could take a majority stake in Fiat Auto. GM bought its existing 20 per cent stake in the company in 2000 for $2.4 billion, implying a total value for the company of $1.1 billion after the write-down.