German luxury car maker BMW hiked its 2010 forecast for sales and earnings sharply on Tuesday, saying that better conditions on the global auto market had boosted its outlook considerably.

The firm now expects to sell more than 1.4 million cars this year, around 10 percent more than the previous forecast, it said.

"Based on this much improved outlook, the BMW group expects full-year profit before tax to rise more sharply than previously forecast," BMW added.

Shares in the company gained more than six percent on the news, compared to a rise of 1.35 percent for the DAX market of top German shares.

In addition to the recovery of global markets, "strong demand for new models such as the BMW 5 Series and BMW X1 has had a positive impact on the business development," the company said in a statement.

The firm has sold around 13 percent more cars during the first half of the year compared to the same period in 2009.

BMW warned, however, that its bullish prediction was dependent on the economic environment remaining favourable.

"Given that numerous economic risks remain in the second half of the year, the new outlook is based on the condition that the economic recovery continues and that general business conditions are not significantly dampened," it said.

Earlier Tuesday, the firm's personnel director Harald Krueger said in an interview with German business daily Financial Times Deutschland that soaring demand in China had outstripped local production capacity.

As a result, the firm is now planning to ship 10,000 of its 3 Series models from Munich, southern Germany, to Chinese markets.

In late April, the company raised its sales target for China, now the world's leading auto market overall, to 120,000 vehicles in 2010 from 100,000 in 2009.

BMW will release its quarterly report for the three months to June on August 3.