Sweden hopes that Volvo Cars (VOLCARb.ST) can agree a deal with the European Commission to limit the impact if tariffs on imported Chinese electric vehicles are passed in a vote by the EU on Friday.
Shares in Volvo Cars, which is majority-owned by China's Geely (GEELY.UL), jumped on the comments in early trade. They were up 4%, among the biggest gainers on the pan-European STOXX 600 (.STOXX) index at 0822 GMT.
Sweden will abstain in the vote later on Friday, Foreign Trade Minister Benjamin Dousa told Reuters.
Dousa said Sweden had considered voting against the tariffs but decided to abstain after discussions with the Commission.
"We have had very positive signals just recently from the Commission that they hopefully could go ahead with individual solutions for the auto industry and for Volvo Cars specifically," he said.
"Sweden's line is that the best thing would be that China and the EU together can come to an agreement in relation to this problem."
Dousa said a possible solution for Volvo Cars would involve an agreement on pricing.
"In practice, it would be a price agreement, that's to say Volvo Cars promises to keep a certain price on the EX30 and other models and in return, they can keep the money instead of it going to the EU."
Sweden abstained in a first non-binding vote on the European Commission's proposed tariffs in July.
Reuters reported on Wednesday that France, Greece, Italy and Poland will vote in favour on Friday, representing a large enough percentage of the EU's population to push through the proposed tariffs.
It would take a qualified majority of 15 EU members, representing 65% of the EU population, to block it.
