Fiat Auto has today reported an 11% increase in third quarter sales to €4.5 billion (£3.1 billion) -compared with the same period last year - and cut its operating loss 18% to €270 million (£188 million).

In late July, the group had said Fiat Auto would likely break even at the operating level in 2006, rather than 2005.

The industrial conglomerate Fiat, Fiat Auto's parent, posted a sharp increase in third-quarter net loss owing to an exceptional item a year earlier, but slashed its operating loss by almost two-thirds.

Fiat's third quarter net loss came to €554 million (£385 million), compared to €84 million (£58.4 million) a year earlier.

Fiat's third quarter 2004 operating loss fell to €97 million (£67.5 million) from €283 million (£197 million).

Sales increased 9.4% to €10.648 billion (£7.4 billion).

The operating result was boosted in particular by Fiat's heavy truck (lorry) division Iveco and agricultural machine unit CNH, the group said.