Shares in French carmaker Renault plunged 20%, before recovering to close 10.3% lower, after police raids on the company's facilities. The firm confirmed the raids took place last week and said investigators wanted to check equipment at its factories.
Investors feared Renault was embroiled in cheating emissions tests, something Volkswagen admitted last year. However, Renault stressed that tests have shown no evidence of devices designed to cheat emissions tests.
Renault's comments were backed up by French Energy minister Segolene Royal who said government tests had not uncovered software designed to cheat emissions tests. According to Renault the fraud investigators were looking at the way Renault uses exhaust emissions technology, and it was co-operating fully with the probe.
The statement said that investigators decided to carry out additional on-site and material investigations, in order to definitively confirm the first findings resulting from the analysis of the independent technical commission.
Investigators went to the headquarters, the Renault Technical Centre in Lardy and the Technocentre in Guyancourt, Renault said.
News of the searches first came from the CGT Renault union. It said the raids targeted the engine control units and that they were likely to be linked to the consequences of the Volkswagen rigged-engines affair.
The union also said police officers took the personal computers of several directors. Last month, Renault said it would invest €50m into bringing the real emissions of its cars into line with those measured in official test conditions.
Authorities and car manufacturers have been on alert in the wake of the Volkswagen emissions scandal, which emerged in late September. VW admitted its diesel-engine cars had been fitted with computer software designed to flatter emissions data during tests.
In the days following the scandal several car manufacturers issued statements affirming their cars adhered to all emissions standards and were not fitted with cheat software. VW said around 500,000 cars in the US had been fitted with the so-called defeat devices, which were designed to make VW cars appear more fuel efficient and environmentally friendly than they really were.
It also announced plans to recall and inspect 8.5 million cars in Europe, including 2.4 million in Germany, 1.2 million in the UK and 500,000 in the US.
Meanwhile, Renault's French rival Peugeot said its factories were not involved in the raids. The company also pointed out that its car emissions equipment had passed recent tests to ensure they complied with regulations.
The test results carried out by the technical committee of Energy Minister Madame Royal were passed on to us and they showed an absence of anomalies, a Peugeot statement said.