AFP - Italian Fiat and US auto group Chrysler have signed a preliminary deal for a strategic alliance whereby Fiat would receive 35 percent of Chrysler in exchange for technology, the two sides said on Tuesday.

Under the non-binding deal, Fiat would contribute vehicle assets and technology "to expand Chrysler's current product portfolio" and would offer access to new markets.

Press reports had suggested earlier that a transfer of technology by Fiat would be aimed specifically at enabling crisis-hit Chrysler to develop quickly a complete range of small, front-wheel-drive and low-carbon emission vehicles.

The statement said that in exchange for contributing products and technology, Fiat "would receive an initial 35 percent equity interest in Chrysler."

Fiat said in a statement on the agreement with Chrysler's main shareholder, US Cerberus Capital Management: "The alliance does not contemplate that Fiat would make a cash investment in Chrysler or commit to funding Chrysler in the future."

The Chrysler group has just received conditional US state aid of 5.5 billion dollars (4.2 billion euros).

Fiat shares gained 3.5 percent when trading in the shares, which had been suspended pending a statement, was resumed.

Referring to conditions laid down by US authorities, the statement said that Fiat would help Chrysler draft a viability plan for the US treasury, commenting that Fiat had restructured successfully in recent years and was a "recognized world leader" in innovative and environmentally-friendly vehicles.

"The proposed alliance would satisfy conditions laid down by the US treasury and all parties would be "asked to contribute to Chrysler's restructuring effort," the statement said, referring to lenders, employees, the UAW union in the United States, and dealers and suppliers.

"This initiative represents a key milestone in the rapidly changing landscape of the automotive sector," the statement said.

For Fiat, it followed several alliances in the last five years, Fiat chief executive Sergio Marchionne said.

Chrysler chairman Bob Nardelli said said the partnership "creates the potential for a powerful, new global competitor."

It would give a return on investment for American taxpayers "by securing the long-term viability of Chrysler brands in the marketplace, sustaining future product and technology development for our country and building renewed consumer confidence, while preserving American jobs."

The vice president of the US United Auto Workers Union (UAW), General Holifield, said that the deal would "help preserve the long-term viability of our great company, its brands and of course UAW-Chrysler jobs."