Volkswagen's (VOWG.DE) Portuguese unit said on Thursday it was cautiously optimistic about a recovery trend in car sales in Europe and cancelled planned temporary layoffs of several days over the next two months.

The Autoeuropa plant, which has long been in talks with workers to avoid short-term layoffs, said in a statement the recovery, which came thanks to consumer incentives offered by European governments, was mainly in Germany but has a positive reflection on Volkswagen Autoeuropa orders.

But the anticipated recovery should be viewed cautiously as it is due mainly to an emergency intervention in the markets with public funds, it said.

The difficulties have not totally disappeared, but we can face the immediate future with more optimism. Existing orders allow to cancel the four days of lay-offs announced for September and October, the statement read.

The company said it could not rule out temporary layoffs after October. It had earlier planned 10 days of layoffs between September and December.

Autoeuropa, which makes the Eos, Scirocco, Sharan and Alhambra models, halted production completely for 16 days earlier this year and has implemented partial stoppages for some models.

The 180,000-car capacity plant produced 94,100 vehicles last year, little changed from 2007. Autoeuropa produced 51,681 vehicles in the first half of 2009.

(Reporting by Andrei Khalip; editing by John Stonestreet)

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