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Peugeot shares sinks 10 percent on capital hike worries

General view of an empty car assembly line at the PSA-Peugeot Citroen automobile plant in Aulnay-sous-Bois, near Paris, July 4, 2013. REUTER
General view of an empty car assembly line at the PSA-Peugeot Citroen automobile plant in Aulnay-sous-Bois, near Paris, July 4, 2013. REUTER

PARIS (Reuters) - Shares in PSA Peugeot Citroen tumbled 10 percent on Thursday, representing a 430 million euros ($592 million) wipeout in market capitalization, after the car maker unveiled a big writedown and confirmed it is mulling a capital increase.

A source told Reuters late on Wednesday that the company's board had approved a plan for an alliance with Dongfeng Motor <0489.HK> in which the Chinese carmaker and the French state would buy large minority stakes at a 40 percent discount to Peugeot's current share price.

"The discount that is being rumoured seems massive, which raises a lot of questions," a Paris-based trader said.

(Reporting by Blaise Robinson; Editing by Natalie Huet)

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