There has been a global backlash against diesel-engine cars since Volkswagen admitted in 2015 to cheating U.S. exhaust tests, meant to limit emissions of particulate matter and nitrogen oxide (NOx), known to cause respiratory disease.

While other countries are also considering restrictions on diesel cars, a ban in the birthplace of the modern automobile is a new blow for the car industry, and an embarrassment for Chancellor Angela Merkel's government, which opposes bans.

The ruling by the country's highest federal administrative court came after German states had appealed against bans imposed by local courts in Stuttgart and Duesseldorf in cases brought by environmental group DUH over poor air quality.

Merkel's government, which has come under fire for its close ties to the car industry, had lobbied against a ban, fearing it could anger millions of drivers and disrupt traffic in cities, with public transport not in a position to take up the slack.

(Reporting by Markus Wacket; Writing by Emma Thomasson; Editing by Maria Sheahan)

Stocks treated in this article : Peugeot, Renault, Bayerische Motoren Werke, Daimler, Volkswagen