NEW YORK (Bloomberg) — Caterpillar Inc. posted second-quarter profit that exceeded analysts' highest estimate, aided by job cuts and a lower tax rate. The world's largest maker of construction equipment raised its full-year forecast, saying stimulus programmes are starting to support global demand.

Caterpillar surged the most since March in New York trading after reporting profit excluding some costs of 72 cents a share. The average estimate in a Bloomberg analysts' survey was 22 cents a share and the high was 42 cents.

"We are seeing signs of stabilisation that we hope will set the foundation for an eventual recovery," chief executive officer Jim Owens said in a statement yesterday. "Credit markets have improved significantly. Fiscal policy and monetary stimulus have been introduced around the world, and we are seeing signs, particularly in China, that they are beginning to work."

Owens has pushed the US for tax and trade policies to boost sales and has eliminated about 17,100 full-time jobs since December. More than 17,000 contract and temporary workers also were cut. The worst recession in half a century led Peoria, Illinois-based Caterpillar to report its first quarterly loss in 16 years in April.

Full-year profit will be $1.15 to $2.25 a share excluding some items, the company said yesterday, exceeding analysts' average estimate of $1.12. Sales will be from $32 billion to $36 billion, in line with the average estimate of $34.8 billion. Caterpillar rose $3.87, or 11 percent, to $41.52 at 9.34 a.m. in New York Stock Exchange composite trading and earlier gained 12 percent in the biggest intraday gain since March 10. The shares dropped 18 percent this year through yesterday. Caterpillar rose 7.8 percent yesterday after Bank of America raised its rating to "buy" from "neutral".

Net income dropped to $371 million, or 60 cents a share, from $1.11 billion, or $1.74, a year earlier, the company said yesterday. Sales fell 41 percent to $7.98 billion, trailing the $8.7 billion average estimate of 15 analysts in a Bloomberg survey.

"They exceeded expectations due to a lower tax rate than analysts expected, lower costs and better than expected profit at Cat finance," said Larry De Maria, an analyst with Sterne Agee & Leach Inc. in New York. Caterpillar's effective tax rate in the second quarter was 10 percent. Owens, 63, in April said Obama's $787 billion economic stimulus plan was insufficient. He pointed to China's planned public-works investments as a programme that could help lift sales. Caterpillar garnered two-thirds of its sales from outside the US.