* Sees encouraging signs of stability in the United States

* To start selling bikes in India in 2010

* Names MD of new India unit, seeking dealers in key areas (Adds details, background)

U.S. motorcycle maker Harley-Davidson Inc (HOG.N) is optimistic about a recovery in the U.S. economy but would continue to tread carefully by adopting cost-saving measures, a senior official said on Thursday.

Milwaukee-based Harley-Davidson also said it plans to start selling its motorcycles next year in India, the world's second-largest market for bikes. It is betting on a rising middle-class population in the world's second-fastest growing major economy to create a demand for its large and powerful machines.

Harley, whose bikes account for half of the motorcycle sales in the United States, has been hurt by a slowdown in its biggest market and last month reported a slump in second-quarter net profit and slashed its 2009 shipment forecast.

We are seeing signs, very encouraging signs of stability emerging and that is good news, Chief Operating Officer Matthew Levatich told Reuters in an interview in the Indian capital, New Delhi.

Levatich declined to forecast demand outlook in 2010, but said the company would focus on its core business and cost-cutting measures would continue.

Harley has been reining in costs by initiating temporary production cuts, permanent job cuts and plant closures and expects cost savings of $140 million to $150 million a year from these actions.

Everything we have announced is underway, Levatich said.

We watch very carefully the global retail demand and we are committed to making tough decisions necessary to balance demand and supply as we have done in the past.

In July, Harley slashed its 2009 shipment forecast to between 212,000 and 228,000 new motorcycles, down from the 303,479 it shipped in 2008. It had previously projected shipment of 264,000 to 273,000 motorcycles for this year.

INDIA PUSH

Harley said on Thursday that it had named Anoop Prakash as the managing director of its newly-announced India unit and had begun the process of seeking dealers in key cities such as Mumbai, Delhi, Bangalore, Hyderabad and the state of Punjab.

The company expects a growing economy, rising middle class and investment in highways to boost leisure motorcycle riding in the country. India is now dominated by small, inexpensive bikes that are used as essential transportation.
Building a long-term business, not gaining volumes or market share in India, is the company's immediate priority.

We are not looking for any flash in the pan sort of performance. We would invest for the long haul because we thing India has got great strengths as an economy, Levatich said.

Prakash said the company would appoint the first few dealers by the first half of 2010 and was actively seeking financing partners.

Harley will import bikes and sell them as complete units in India and has no plans for the time being to set up an assembling or manufacturing facility in the country, he said. (Editing by Himani Sarkar; Editing by Jon Loades-Carter)

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