Fiat Chairman Fresco to Resign on Friday

Paolo Fresco, Fiat's Chairman, brought forward his resignation today and proposed he should be replaced by Umberto Agnelli, the head of the industrial group's founding family.

In a move largely expected by investors as Fiat struggles to turn around its loss-making car arm, Fresco confirmed he would formally present his resignation at a meeting of the group's board on Friday.

In a statement, the former General Electric vice chairman who took over the top job at Fiat in 1998, said he was resigning a few months earlier than planned to ensure a "smooth succession" at the group.

"I am sure that my decision represents a strong message of clarity for those outside and inside the group," Fresco said, adding that Fiat's core shareholders, the Agnelli family, would again take command of the group.

Fiat shares were down 4.2 percent at 6.87 euros by 1520 GMT, slightly lower than before the announcement and not far off a new 18-year low of 6.81 euros touched on Monday. The stock underperformed the DJ Stoxx European automakers index, down 1.7 percent.

Investors have previously said that Umberto Agnelli - whose brother and Fiat patriarch Gianni died in January - might not be keen to take the tough measures needed to get the group back on its feet. Earlier, a financial source told Reuters that Fresco would resign on Friday to be replaced by Agnelli.

Fiat's board is due to meet on Friday to approve the group's 2002 results and measures to turn around its cash-burning car unit.

The plans include the expected sale of Fiat's insurance arm Toro and its aviation division Fiat Avio - worth an estimated three to four billion euros together - as well as the sale of a majority stake in customer credit division Fidis.

Fresco, talking to reporters earlier on the sidelines of a conference in London, said efforts to sell Toro were going well and would be detailed on Friday when the board would examine "a bunch of issues".

"We will also talk about Fidis, about Fiat Avio, we must talk about Toro," he said, adding the group was seeking to create "fresh financial resources, selling activities which aren't strategically important for the company."