Industrial group Fiat
Italian newspaper La Repubblica said Fiat would announce the job cuts as it unveils its 2010-2014 strategic plan on April 21.
The job cuts would affect car plants in Italy and represent 15 percent of the 30,000 workers employed on assembly lines in the country, the newspaper said.
Shares in Fiat rose to a two-month peak and were up 4.15 percent at 9.79 euros at 0909 GMT, making it the lead gainer in the European auto Stoxx index <.SXAP>.
Fiat, which took a stake in struggling U.S. carmaker Chrysler to expand its international footprint, is to lay off 1,500 workers at Sicily's Termini Imerese plant, scheduled to close on December 31, 2001, and a further 500 at the Cassino plant.
But the newspaper cited union sources saying that a further 2,000 to 2,500 could lose their job at the historic Mirafiori plant in Turin and another 500 at the Pomigliano plant.
Traders said higher-than-expected job cuts were pushing the shares up.
Two analysts said the shares were also being pushed up by an unsourced report also in La Repubblica that a long-awaited spin off of the car operations of Fiat Group from its commercial vehicle and publishing activities would happen as soon as this summer.
The spin off was not expected so soon, said an analyst.
Many analysts believe Fiat Chief Executive Sergio Marchionne would need to have a firmer grip on Chrysler before venturing into a spin off.
The Fiat group employs just over 80,000 people in Italy and 190,000 worldwide, according to its latest financial report.
La Repubblica also said Fiat would cut the number of car models produced to eight from 12 and boost Italian production to 900,000 cars, representing a 50 percent increase.
In the United States, the Italian group would seek to produce seven models using the brands Fiat, Lancia and Alfa Romeo for a total production of more than 350,000 units.
Fiat declined to comment on the reports.
(Editing by Hans Peters)
(Reporting by Lisa Jucca and Nigel Tutt; additional reporting by Stefano Rebaudo)