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Axa, one of the world's biggest insurers, will stop investing in the tobacco industry and sell investments worth more than €1.7bn (£1.3bn).

It said investing in the sector made no sense given that smoking killed some six million people a year.

The move by Axa is an attempt to support government efforts to reduce the number of people who smoke.

Tobacco companies last week lost a High Court challenge to plain packaging for cigarettes sold in the UK.

A major health insurer, Axa said its role was increasingly about prevention rather than cure.

Its announcement coincides with the annual World Health Assembly in Geneva, where World Health Organization member nations meet to discuss global public health policy.

The Axa Group, which manages assets worth €1.36 trillion, will sell its €184m of shares in tobacco companies, and tobacco industry bond holdings that are valued at almost €1.6bn.

However, that accounts for just 0.6% of its corporate bond holdings.

Analysis: Hugh Pym, health editor

Some ethical investment funds have shunned tobacco shares for some time now. The big US pension fund Calpers decided more than a decade ago not to buy shares in tobacco companies, but Axa seems to be the first major European institutional investment fund to pull out of the sector.

Selling €1.7bn of shares and bonds will be a significant disposal. Cynics might say it is a good time to sell following a sustained rise for tobacco shares. Yet Axa is clear that, as a health insurer, holding tobacco investments is no longer justifiable.

With two tobacco companies - British American Tobacco and Imperial Brands - in the FTSE 100, many private investors will be indirect holders through tracker funds. The question now is whether other shareholders, large or small, will follow Axa's lead.

Incoming chief executive Thomas Buberl said that although the decision would cost Axa money, it would generate savings by resulting in fewer claims for tobacco-related diseases.

"The business case is positive," he said. "It makes no sense for us to continue our investments within the tobacco industry. The human cost of tobacco is tragic - its economic cost is huge."

Mr Buberl said Axa wanted to send a signal to other institutional investors and encourage others to follow suit.

Image caption Investing in tobacco made no sense for Axa, says chief executive Thomas Buberl

The WHO estimated that eight million people a year will die of smoking-related diseases by 2030, mostly in developing countries.

Cary Adams, chief executive of the Union for International Cancer Control, said: "We need companies like Axa to signal that investing in an industry which kills its customers is simply the wrong thing to do, and this announcement ... is a milestone step in the right direction."