U.S. manufacturing bellwethers Caterpillar Inc and United Technologies Corp reported on Tuesday that falling global demand for their big-ticket products battered first-quarter results.

But the companies also suggested that if business conditions aren't exactly getting better they aren't getting worse either -- offering twin glimmers of hope to investors searching for signs of a rebound.

On Wall Street, shares of United Technologies rose as much as 6.6 percent, and shares of Caterpillar , which fell sharply after its results were released, rallied to gain 2.7 percent.

Caterpillar, the world's largest maker of mining and construction equipment, reported its first loss since 1992, pulled into the red by costs associated with a recession-triggered restructuring that has so far resulted in the elimination of 25,000 jobs.

The company, which also makes turbines and diesel engines, slashed its full-year forecast, warning that sales this year could decline the most since the 1930s.

Even so, Caterpillar managed to sound upbeat. During a conference call, executives focused attention on how swiftly the company had reacted to the downturn -- and how much better key financial metrics were performing than in previous downturns.

Jim Owens, Caterpillar's chairman and chief executive, also gave an encouraging first peek into the company's second-quarter performance. April was the first month since last fall that our near-term sales and operation planning did not result in a drop in the year-ahead forecast, he said on the call.

We're certainly not out of the woods yet. But there's reason for some optimism.

Investors seemed to take the company's word and sent its shares higher in afternoon trading.

First quarter sales were down 30 percent sequentially, but the gross margin rose, said Alex Blanton, an analyst at Ingalls & Snyder. And they did that even as they reduced inventories, maintained the dividend and increased cash. That's remarkable.

UNITED TECH SEES BETTER 2010

Diversified manufacturer United Technologies, meanwhile, reported a 28 percent drop in first-quarter profit as a slumping economy crimped demand for its jet engines and air conditioners.

But the Hartford, Connecticut-based company, which also makes Black Hawk helicopters and Otis elevators, seemed to hold out hope that demand would begin to stabilize in the second half.

The company expects to return to profit growth next year, Chief Financial Officer Greg Hayes told analysts on a conference call.

United Tech said order trends were weak in the first quarter. But it said the rate of the year-over-year decline had stabilized across most of its businesses in March and it stood by its full-year forecast.

Profit at the company's Carrier air-conditioner unit -- which closely tracks construction activity -- tumbled 91 percent in the quarter on a 27 percent drop in revenue. That made it United Tech's weakest segment in the quarter.

The company seems to be managing the downturn better than expected, wrote Merrill Lynch analyst Ronald Epstein in a note to clients.

Although Carrier's results are disappointing, we expect they have reached a bottom and should begin to improve.

SMALLER PRODUCERS

Two other smaller industrial players are reporting today: Pentair Inc
, which released its numbers before the opening bell, and Terex Corp , which will report after the closing bell.

Pentair, which makes products including water filtration systems and electrical enclosures, cut its profit forecast for the rest of the year, with Chief Executive Randall Hogan citing dismal conditions in its key markets.

The Minneapolis-based company said it now expects to earn at least $1.40 a share this year. In February it said it expected $1.70 to $2.00 per share.

We believe our first-quarter earnings -- and the sales decline that drove it -- represents a low point for the company, Hogan said.

Its shares fell 5 percent to $22.19 on the NYSE.

(Editing by Patrick Fitzgibbons, Dave Zimmerman and Steve Orlofsky)