Italian auto-maker Fiat vowed yesterday to stick with plans to forge an alliance with distressed US group Chrysler after a US Supreme Court decision put a temporary freeze on the transaction.

"Fiat is committed (to a tie-up with Chrysler) even after June 15," a Fiat spokesman said. The company is entitled to pull out of the deal after that date if Chrysler's recovery plan has not been fully approved.

Chrysler filed for bankruptcy protection in late April and a New York court on May 31 approved the company's reorganisation and agreed to allow the tie-up with Fiat to proceed. But the US Supreme Court on Monday put a temporary freeze on the plan, which would allow Chrysler to emerge from bankruptcy as a new entity.

A group of Indiana pension funds had opposed Chrysler's sale to Fiat and filed the emergency appeal with the Supreme Court.

The court order, signed by Justice Ruth Bader Ginsburg, will now allow the justices to consider whether to allow a full hearing on the legal issues.

Without the stay, the deal could have been closed as of 9 p.m. Monday. The rescue plan gives Fiat a 20 per cent stake in Chrysler with a possibility of increasing that share. In return, Fiat will allow access to its technology to enable the US car maker to make the smaller, greener cars that are increasingly in demand.

Fiat shares were showing a loss of 0.46 per cent at €7.5 in mid-morning trading on the Milan stock exchange which was up 1.10 percent overall. (AFP)