The sale was placed through ING Barings. ``Ford sold out all its stake in Kia to J.P. Morgan on Tuesday,'' said a trader at ING Barings. ``But I don't know why J.P. Morgan bought the Kia shares''.

He said the US car giant had unloaded its holdings ahead of a capital reduction in the ailing South Korean company after Hyundai Motor was awarded a bid to take over Kia.

Creditor banks of Kia Motors have decided on a 90-per cent capital reduction in Kia, which would reduce Ford's total stake together with Mazda Motor Corp. to about 6 per cent from 16 per cent.

Mazda, a Japanese affiliate of Ford Motor, holds a 7.88-per cent stake in Kia and there were no immediate sign how Ford would deal with Mazda's holdings in Kia.

Creditors would recapitalize Kia with a total of 1.5 trillion won, 51per cent of which would be acquired by Hyundai. The Chosun Ilbo newspaper said on Thursday Ford, which had invested a total of $250 million in Kia, had decided to regard its investment as a loss.

It said J.P. Morgan bought the Kia shares on expectations Kia's financial structure would improve through a large write-down of debts offered by creditors, which would result in a sharp rise in Kia's share prices in the future. Hyundai was given debt relief of 7.3 trillion won in its takeover deal.