FILE PHOTO: A logo of the German luxury carmaker BMW is seen during the company's annual news conference in Munich, Germany, March 21, 2018. REUTERS/Michael Dalder/File Photo

LONDON (Reuters) - Shares in BMW BMWG.DE reduced gains sharply on Tuesday with traders pointing to a Bloomberg report saying the German carmaker was being sued for installing "defeat devices" in U.S. diesel cars.

Citing a complaint filed on Tuesday in New Jersey federal court, the report said drivers of “tens of thousands” of X5 and 335D model diesel cars built between 2009 and 2011 sued BMW and its technology supplier, alleging they installed algorithms designed to manipulate testing systems.

BMW had no immediate comment.

Its shares were last up 0.7 percent, underperforming the broader autos .SXAP index which was rising 1.2 percent.