Shares in CNH Global jumped 14% to their highest in more than a year after the maker of Case and New Holland tractors said it was poised to sidestep the worst of a continuing slowdown in farm equipment markets.

Farm machinery makers' sales will "continue to soften" through the last months of 2009, falling by 20-25%, led by a particularly weak market for smaller tractors, the US-based group said.

The decline will leave tractor sales down by 10-15% for 2009, with the number of combines shifted falling by up to one quarter.

"Worldwide industry sales continue to be impacted by the economic and credit conditions," CNH said.

'Compete aggressively'

However, there were some signs of improvement, with China's market for high horsepower tractors, and demand for Brazil's sugar cane harvesters, set to prove "pockets of strength".

It has also cut back production to less than sales to foster a reduction in inventories.

"The actions we have been taking, to ensure that CNH and its dealers and distributors are ready and able to compete aggressively as market conditions improve, will begin to show results in the fourth quarter," Harold Boyanovsky, the CNH chief executive, said.

Fourth quarter equipment sales would drop by 10%, compared with a 32% slump, to $2.96bn, in the July-to-September period.

The group reported an after-tax loss of $25m for the quarter, its third successive quarter in the red, compared with earnings of $252m a year before.

CNH shares stood 12.3% higher at $22.31 in afternon deals in New York.

They earlier hit $22.68, their highest since September last year.