* Says some markets in Asia started to recover
* Main markets don't appear to be bouncing back yet
* Says to reduce costs by 21 bln SEK in 2009
* Says has high liquidity reserves
(Adds quote, detail, stock price)
By Johannes Hellstrom
ESKILSTUNA, Sweden, June 16 (Reuters) - Truck maker Volvo said on Tuesday it believed demand had reached its floor and some markets in Asia had shown signs of recovery, but it was still keeping a lid on production.
"We think we have hit the bottom. Now it's a question of how fast it will come back," Chief Executive Leif Johansson said at a capital markets day in Eskilstuna, west of the Swedish capital.
The world's second biggest truck maker said its main markets did not appear to be bouncing back yet.
"We have not yet seen any signs of our primary markets in Europe or North America recovering, although we may have started seeing indications of trends levelling out," Volvo said in a statement.
The company said some markets, such as China, India and Japan, were picking up, largely due to government stimulus packages.
Shares in Volvo were up 4.8 percent at 1325 GMT versus a 1.1 percent rise in the broader Swedish market.
Volvo, which plunged to a wider-than-expected loss in the first quarter, is in the midst of cutting thousands of jobs to adjust to what it has described as the steepest ever decline in market demand due to the global downturn.
It said it had cut production further since the first quarter in order to adjust to the weak demand. "We will continue to have low-cost coverage until we have balanced our stocks and costs with demand in the market, and this will impact profitability," it said in the statement.
Annual costs would be slashed by 21 billion Swedish crowns ($2.69 billion) this year from the previous year, the company said.
It also said it had high liquidity reserves and an advantageous loan structure, with few loans maturing in the next two years.
"Furthermore, with its global presence, the Group has excellent opportunities for raising loans on the capital market," it said in the statement. ($1=7.816 Swedish Crown) (Writing by Veronica Ek; editing by David Holmes and Simon Jessop)