German tire maker Continental has signed an agreement to buy the tire unit of India's Modi Rubber, Continental said on Monday.

It did not disclose financial details, and said the completion of the deal to acquire Modi Tyres "depends on the fulfillment of several conditions."

Shares in Modi Rubber shot up 10%, its daily limit, to 75.35 rupees on the Bombay Stock Exchange.

Continental, the world's fourth largest tire maker with reported sales of 26 billion euros ($37.5 billion) in 2010, said Modi Tyres would become a fully owned subsidiary and would focus on local production and distribution of radial truck and bus tires as well as radial car tires.

"This development underlines Continental's commitment to the Indian market and is part of the company's strategy to invest in growing markets in Asia for its core businesses," it said in a statement.

Auto sales in India grew a record 30% in 2010/11 to 1.98 million units, driven by a burgeoning middle class in Asia's third-largest economy, easier access to loans and a wider choice of models.

But higher input costs and interest rates are seen crimping demand for cars and sales growth is expected to more than halve in 2011/12 to 12-15%.