FRANKFURT (AFP) - General Motors has unexpectedly re-set its global development strategy, scrapping plans to sell its German-based European unit Opel and retaining key small-car expertise in a bid to shore up an escape from bankruptcy.

The dramatic news sparked outrage Wednesday in Germany but drew more muted expressions of surprise in Spain, concern in Britain and delight in Poland -- three European countries where the US auto maker also has operations.

The decision Tuesday came against an improving European economic backdrop but left open questions that could decide Opel's ultimate fate, such as whether its ability to build good compact cars is enough in a turbulent, crowded marketplace.

Some German auto analysts said the decision made sense from an industrial viewpoint while others warned GM was making a huge bet as the sector came to a crossroads and as it pinned its hopes on electric cars and strategic alliances.

As GM struggled with bankruptcy, it initially agreed to sell a 55-percent stake in Opel and its sister brand, British-based Vauxhall, to the Canadian auto parts maker Magna International and its Russian partner, the state-owned Sberbank.

But now the GM board "has decided to retain Opel and will initiate a restructuring of its European operations in earnest," a GM statement said.

The company explained the U-turn by underscoring "an improving business environment for GM over the past few months, and the importance of Opel/Vauxhall to GM's global strategy."

European auto sales have climbed in recent months, with small cars chalking up the most deliveries, but analysts warn the market will slump again next year as government support schemes are wound down.

Meanwhile, the global market for fuel-efficient models is expected to be stronger than for GM's classic gas-guzzlers, and the US group, bolstered by billions of dollars in state aid, has moved to hold on to a critical asset.

"The strategic importance of Opel is enormous," Metzler Bank analyst Juergen Pieper told AFP.

US rival Chrysler made the same choice when it agreed to a takeover by the Italian Fiat.

But Germany pushed for Opel's sale to Magna and Sberbank, and on Wednesday, Economy Minister Rainer Bruederle slammed GM's move as "totally unacceptable."

British authorities said they would work with GM to secure the future of British plants, and Polish Economy Minister Waldemar Pawlak quickly welcomed the GM decision, calling it good news for what he said was an efficient site there.

GM Europe employs about 55,000 workers in Germany, Britain, Spain, Belgium, Poland and Austria.

Russia and Spian expressed "surprise" at the news, with Moscow saying it would be checking to make sure the decision was legal.

The Magna deal had raised questions about the ultimate strategy of Sberbank, and the possibility of plant closures in western Europe to the benefit of Russian sites.

Magna meanwhile said it accepted GM's decision.

German Chancellor Angela Merkel returned Wednesday from a high-profile visit to Washington and headed into a cabinet meeting to discuss the news as Bruederle demanded details of how GM would restructure Opel.

Germany had spent months haggling with GM, the European Union and Magna over the terms for 4.5 billion euros (6.6 dollars) in state aid for the mooted sale.

Merkel's spokesman Ulrich Wilhelm told media: "I can imagine there will be contact in the next few days between the chancellor and the American president."

The White House said it had nothing to do with General Motors' decision.

Britain called for talks with GM.

"I am keen for very early discussions with GM over their plans for the business and how they will affect British plants and workers," business minister Peter Mandelson said,

"I have always said that if the right long-term sustainable solution is identified, then the government would be willing to support this."

The dragged-out sale of Opel turned into a major controversy as governments in Europe fought to save their parts of the loss-making automaker.

GM president and chief executive Fritz Henderson estimated restructuring costs at 4.4 billion dollars (three billion euros), and vowed to work with European unions.

Those in Germany swiftly promised nationwide protests however, while others in Spain and Belgium called for clarification on what the GM decision meant for their members.

British unions that feared the consequences of a Magna deal welcomed the latest news.

European Union regulators which had cast doubt last month on the deal with Magna, warned Wednesday that new terms with GM would have to pass muster too.

Pieper expected GM to seek state aid as well from Germany and other European governments, noting that "it's difficult for the German government to say yes to one party and not to another."

He called GM's decision "a quite logical outcome" because the US group was now financially stronger and "starting to look towards the future."

But analyst Ferdinand Dudenhoeffer said GM "took the biggest risk possible."

Europe's auto sector has surplus capacity of around 30 percent and workers cost much more to hire than elsewhere, meaning a shake-out at some point is inevitable, observers warn.