NEW YORK - Caterpillar Inc, the world's biggest maker of heavy machinery, said on Monday it plans to permanently cut 2,500 workers even as increasing demand will allow it to recall some employees who were laid off during the economic downturn.

Caterpillar has already brought back some workers, and estimates that due to signs of recovery in the global economy, about 550 of those laid-off will return by the end of 2010. The company has forecast sales next year would rise between 10 percent and 25 percent.

However, about 2,500 laid-off workers will now be offered separation packages. The company did not say which facilities were affected. On Monday, Peoria, Illinois-based Caterpillarbegan notifying approximately 2,500 U.S. employees they would be losing their jobs.

It's important to remember that we are not close to the record-breaking demand we experienced from 2004 to 2008, Chief Executive Jim Owens said in a statement.

The company, which has parted ways with about 34,000 full-time and contract workers due to production cuts and falling sales, also repeated the sales and earnings targets it introduced last week.

Caterpillar this month named company veteran Doug Oberhelman, head of its engines and turbines unit, to succeed retiring CEO Jim Owens.

Caterpillar shares rose $1.25, or about 2.1 percent, to $58.85 in early New York Stock Exchange trading.

(Reporting by Nick Zieminski, editing by Gerald E. McCormick and Maureen Bavdek)

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