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Trading has been "better than we anticipated".

In their first-ever deal, the companies have announced they will make more fuel-efficient pickup trucks and sport-utility vehicles as the US heads toward stricter emissions standards.

In a shock move, General Motors has cancelled plans to sell its European car business, comprising the Opel and Vauxhall marques, to a Russian-backed consortium.

The Detroit company’s board said it had scrapped plans for the sale to Canadian car parts Magna and Russia’s Srbank, because of "an improving business environment for GM over the past few months."

Fears about the US economic recovery may have been overdone as strong house sales, construction and manufacturing data boosted stocks on Wall Street.

The reports, along with better-than-expected earnings and a forecast boost from Ford Motor, encouraged investors back into the market after last week’s drop.

Pending home sales in September jumped far more than expected, while construction spending in the month unexpectedly surged and a measure on manufacturing hit its best level since April 2006.

Stocks on Wall Street have failed to sustain the week’s strong opening by European markets, which were buoyed by higher commodity prices.

SunTrust Banks warned that lenders faced more credit losses and commercial real estate may falter through 2010, sending financial stocks down in the US and Canada.

Banks in the S&P 500 Index have fallen 1.7% while the main index closed  0.05% lower at 1025.57, after climbing as much as 0.9%.

The Dow Jones Industrial Average gained 3.32 points, or 0.03%, to 9509.28.