* Says sees Q3 sales increase in low-teen percentage vs Q2
* Expects Q3 group result close to break even
* Sees positive free cash flow
* Shares up 4.6 percent
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FRANKFURT, June 25 (Reuters) - Struggling German chipmaker Infineon raised its outlook for fiscal third-quarter sales growth and group results on the back of cost cuts and measures to save cash, the company said on Thursday.
Its shares rose some 7 percent on the news and were up 4.6 percent at 2.49 euros by 1418 GMT, making it the biggest gainer in the German technology index TecDax.
"Despite the adverse overall economic climate and the difficult semiconductor market environment, our Combined Segment result should approach break-even," Infineon Chief Executive Peter Bauer said in a statement.
Revenues will increase by a low-teen percentage compared with the second quarter, the company said.
Munich-based Infineon had forecast in April that third-quarter sales would gain about 10 percent from the previous quarter and that the segment result margin would be a negative mid to high single digit.
Infineon also said that "it anticipates free cash flow to be clearly positive and foresees a gross cash position approaching 850 million euros ($1.18 billion) for the end of the quarter".
In the second quarter, which ended March 31, Infineon had posted sales of 747 million euros and a net loss from continuing operations of 258 million euros.
The chipmaker competes with privately owned Dutch NXP as well as Texas Instruments and STMicroelectronics (STM) and like its rivals suffers from a collapse in the global car market and inventory reductions throughout the electronics supply chain. (Reporting by Nicola Leske)