Caterpillar Inc , the world's largest maker of earth-moving equipment, said on Monday it plans to raise prices on most of its machinery up to 2 percent next year.

The U.S. manufacturer said in a filing with the Securities and Exchange Commission the increase would reflect current industry factors and current and expected general economic conditions.

Separately, Morgan Stanley raised its target price on the Peoria, Illinois-based company's shares, which it rates underweight, to $44 from $34, saying it now expects machinery sales to rise 2 percent next year. Previously it had forecast a 4 percent decline.

Caterpillar shares were up 3 percent at $50.25 on the New York Stock Exchange in early trading.

So far this year they are up 9 percent, outpacing the 8 percent rise of the Dow Jones industrial average <.DJI>.

(Reporting by Scott Malone, editing by Gerald E. McCormick and Maureen Bavdek)

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