SEOUL (Reuters) - French tyre maker Michelin has raised its stake in Hankook Tire Co. Ltd. to nearly 10 percent through stock market purchases, the South Korean company said on Friday.

The announcement comes after Michelin said its shareholding in Hankook rose from 6 to 8.9 percent, as part of a previous agreement with Hankook allowing Michelin to hold up to 10 percent of Hankook’s capital.
At the time, market talk was that Michelin was building up shares in the top South Korean tyre maker in possible preparation for a full takeover.
That sent Hankook shares rallying by their daily limit on June 18 to their highest in more than four months.
However, analysts played down the prospect of Michelin bidding for Hankook because family and friendly shareholders hold a combined 35 percent in the firm.
A Hankook Tire spokesman said that it had not been informed of the stake increase by Michelin in advance, and did not know the reasons behind the additional share purchase.
Hankook Tire has a market value of 2.2 trillion won ($2.1 billion) and jointly commands about 80 percent of the South Korean market with domestic rival Kumho Tires Co. Ltd.
Tyre makers have been suffering from higher raw material prices and surplus capacity, with demand for vehicles slowing on record-high oil prices.
Hankook Tire supplies more than 30 major auto makers around the world, including General Motors Corp., Volkswagen AG and Hyundai Motor Co.
Shares in Hankook Tire shed 2.4 percent to close at 14,350 won after the announcement, underperforming the wider market’s 1.9 percent drop.