Toyota will raise its global output target for the year to March 2010 by 3% to 6.5 million units says the Yomiuri newspaper, signalling the latest sign of a nascent recovery in auto demand.

The newspaper said that Toyota's inventory adjustment has run its course, and sales are picking up due to various government measures around the world to simulate demand for new cars.

Governments are offering subsidies and tax incentives to encourage consumers to buy new fuel efficient models to boost their auto industries, hit hard by the global downturn and ensuing sales slump.

The Yomiuri report comes five days after Toyota trimmed its annual operating loss outlook by JPY100bn ($1bn) and edged up its group-based global vehicle sales forecast for the current financial year by 1.5% to 6.6m units.