FRANKFURT -- Shares in Continental eased and Autoliv jumped on talk the German tire and car parts maker will bid for Autoliv, dealers said.
Continental was down 0.4 percent at 57.31 euros in a slightly weaker DAX with dealers citing talk of an offer for the Swedish group, the world's biggest maker of air bags and seat belts for the fiercely competitive car market.
"Autoliv is a firm with a market cap of over $4 billion, which means Continental would have to raise cash to pay for it," said a Frankfurt trader.
Autoliv shares were up 1.5 percent at 340 Swedish crowns.
A company spokesman said speculation about a possible bid stemmed from a research note from brokerage Cheuvreux.
Cheuvreux said it saw "a strong chance" that Continental would use its healthy cash position for a massive extra dividend by the end of 2006 or make an acquisition.
It singled out Autoliv as the most probable takeover targets, along with Haldex, a Swedish supplier of components to the truck industry, and German Elmos Semiconductor AG, a maker of chips mainly to the car industry.
It said a reasonable price for Autoliv would be 425 crowns a share. Haldex shares rose 2.5 percent to 125.5 crowns while Elmos shares dipped 0.4 percent to 12.81 euros.
Autoliv has a market worth of $4.24 billion, according to Reuters data. Haldex market capitalization is about $376 million and Elmos' some $314 million.
Continental's market capitalization is some $9.92 billion. The firm declined to comment on the market talk.