Deere & Co reported a stronger-than-expected quarterly profit on Wednesday, and raised its full-year outlook, buoyed by a recovery in demand for its construction equipment.

The company, the world's largest maker of tractors and harvesters, expects to earn $1.6 billion in fiscal 2010, up from an earlier forecast of $1.3 billion, thanks in part to rebounding building markets.

It predicted worldwide sales of construction and forestry equipment would rise 30 percent for full-year 2010, saying U.S. construction-equipment markets are showing signs of stabilization.

Deere reported a fiscal second quarter profit of $547.5 million, or $1.28 a share, for the fiscal second quarter ended April 30, up from $472.3 million, or $1.11 a share, for the comparable quarter last year.

Sales during the quarter rose 6 percent to $7.13 billion.

Stripping out one-time items related to U.S. healthcare reform, the company said it made $1.58 a share.

Analysts, on average, expected the Moline, Illinois-based company to report a profit before items of $1.09 a share, and a net profit of $1.04 a share, on sales of $6.62 billion, according to Thomson Reuters I/B/E/S.

(Reporting by James B. Kelleher; Editing by Derek Caney)