Daimler said on March 24 it had signed a major contract with Dubai that would see the German group supply 260 city buses for an undisclosed amount.

Production of Daimler's Citaro model, which carries 33 passengers, would begin before the end of the first quarter, the company said.

They were to be fitted with special insulation to deal with high temperatures in the emirate.

"We are increasing our commitment to the growth region of the Middle East," the head of Daimler's bus division, Hartmut Schick said.

Daimler, which also makes Mercedes-Benz autos and is the world's leading heavy truck manufacturer, is suffering from the collapse in global automobile markets.

On March 22, Daimler said that a state-owned fund from Abu Dhabi, Aabar, would take a 9.1% holding and become the biggest Daimler shareholder, ahead of Kuwait. The participation is designed to protect Daimler from hostile takeover bids and bolster its cash reserves.

Copyright Agence France-Presse, 2009