Republican presidential nominee Mitt Romney acknowledges the cheers of the crowd at a campaign rally in Avon Lake (Reuters)

The battle for the decisive state of Ohio has grown more bitter after Republican candidate Mitt Romney was accused of deliberately spreading falsehoods that vehicle maker Jeep intended to move all production to China.

"I saw a story today that one of the great manufacturers in this state, Jeep, now owned by the Italians, is thinking of moving all production to China," Romney told a Republican rally in the state.

His statement, which referred to an article on news agency Bloomberg, was promptly dismissed by Chrysler, which owns Jeep, as false.

"Let's set the record straight: Jeep has no intention of shifting production of its Jeep models out of North America to China. A careful and unbiased reading of the Bloomberg take would have saved unnecessary fantasies and extravagant comments," Chrysler executive Gualberto Ranieri wrote on the official Chrysler blog.

Ranieri explained that the company would boost existing production sites "rather than shifting output from North America to China". Asserting the contrary was "a leap that would be difficult even for professional circus acrobats," he added.

The Romney campaign team later released a TV and radio ad in Ohio that again fuelled speculation of plans to send jobs abroad and prompted Chrysler CEO Sergio Marchionne to stress that the company had no such intention.

"Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China. Mitt Romney will fight for every American job," the TV ad said.

"Under President Obama, GM cut 15,000 American jobs. But they are planning to double the number of cars built in China - which means 15,000 more jobs for China. And now comes word that Chrysler plans to start making jeeps in - you guessed it - China," the radio ad read.

Marchionne responded in an email to employees: "I feel obliged to unambiguously restate our position: Jeep production will not be moved from the United States to China.

"Jeep assembly lines will remain in operation in the United States and will constitute the backbone of the brand. It is inaccurate to suggest anything different," he added.

"We've clearly entered some parallel universe during these last few days. No amount of campaign politics at its cynical worst will diminish our record of creating jobs in the US and repatriating profits back to this country," GM spokesman Greg Martin told Detroit Free Press.

In 2009 the Obama administration helped GM and Chrysler to remerge from bankruptcy with an $80bn assistance plan.

Italian car producer Fiat SpA bought a 20 percent stake in Chrysler and later increased his ownership to 58.5 percent buying the shares held by the United States Treasury.

According to Fiat and Marchionne, in three years the company has created 11,200 jobs in the US.

In Ohio one in every eight jobs is related to the motor industry, Reuters said. Jeep has a production complex in Toledo, Ohio, and has announced an expansion plan of $365m that would add 1,100 jobs earlier this year.

Obama's $80bn boost is credited with giving him an advantage among blue-collars voters that could have a decisive result in Tuesday's presidential election. Analysts say that winning Ohio would be likely to mean winning the White House on Election Day.

US President Barack Obama tours Chrysler Group Toledo Supplier Park in Toledo in 2011 (Reuters)