Caterpillar Inc, the world's top maker of earth-moving equipment, diesel engines and gas turbines, posted disappointing quarterly earnings on Friday and cut its full-year forecast, sending its shares down 3.5 percent.

The company said third-quarter earnings rose 21 percent as strong sales overseas offset a slump in the U.S. residential construction market, but the results fell short of Wall Street expectations.

The Peoria, Illinois-based company reported a net profit of $927 million, or $1.40 a share, up from $769 million, or $1.14 a share, a year earlier.

Analysts, on average, had expected $1.43 a share, according to Reuters Estimates.

Revenue rose 9 percent to $11.44 billion, topping an average Wall Street forecast of $10.33 billion.

Caterpillar lowered its forecast for full-year earnings, saying it now expects $5.20 to $5.60 per share, down from a previous estimate of $5.30 to $5.80. Its revenue forecast was unchanged at $44 billion.

In early trading, Caterpillar shares were down 3.5 percent after closing at $77.66 on the New York Stock Exchange on Thursday.

Jim Owens, Caterpillar's chief executive, said the third-quarter results -- which came as the company grapples with the effects of the housing slump and a downturn in its on-highway diesel engine business -- demonstrated how its huge and growing overseas business stabilizes its earnings.

Despite weakness in U.S. markets, our sales and revenues increased 9 percent, Owens said in a statement. We continue to see remarkable growth outside of the United States, with particular strength in key industries like mining, oil and gas, electric power and marine engines.

(Reporting by James B. Kelleher)