(Corrects paragraph 2 to “global production,” not “production in Japan”)

Toyota Motor Corp <7203.T>, has raised its global sales forecast for the year to March 2010 by 3 percent to 6.7 million cars, the Tokyo Shimbun daily reported on Saturday, in the latest sign of a nascent recovery in auto demand.

Toyota, the world's largest automaker, is also raising its global production by 8 percent to 6.45 million vehicles for 2009/10, thanks to the impact of government subsidies and tax incentives on new fuel efficient cars, the paper said.

Officials at Toyota could not be reached for comment.

Toyota has been struggling with its worst downturn since it was founded in 1937, but its sales have picked up recently, climbing 9 percent in August from the same month last year.

Japan in April began offering as much as 250,000 yen ($2,789) in subsidies on each purchase of a low-emission car, part of the country's largest-ever economic stimulus package.

Toyota has asked the new government to extend the deadline for these subsidies by two years to the end of March 2012.

(Reporting by Hugh Lawson)

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