* Sees positive demand trend going into 2011
* Sees no major impact on demand for euro zone debt woes
* Sees no short-term threat to margins other than forex
(Adds quotes, background, share price)
By Niklas Pollard and Johannes Hellstrom
STOCKHOLM, Dec 1 (Reuters) - Swedish engineer Atlas Copco expects demand to remain favourable going into next year, with margins remaining at recent robust levels after a strong recovery in demand this year.
"I still see a positive trend," said Ronnie Leten, chief executive of the maker of compressors and machinery for mining and construction industries.
"We see good demand in eastern Europe and Russia, good development going on in America, and you will have difficulties talking negatively to me about China," he told Reuters on Wednesday on the sidelines of an investor presentation.
Debt woes and resulting market jitters afflicting parts of Europe, which remains Atlas Copco's biggest market despite rapid expansion in Asia, would create "some hiccups" but not undermine underlying favourable demand, Leten said.
"Luckily, we are in areas where the countries need our products. When you build roads, when you build hydropower you need compressors, you need mining equipment, you need tools."
Atlas Copco shares were up 1.3 percent to 157.3 crowns by 1056 GMT, compared with a European industrials index up 1.2 percent.
Atlas Copco and Swedish peers such as bearings maker SKF and tool and machinery maker Sandvik have rebounded rapidly since the global financial crisis, led by surging sales in emerging markets in Asia and Latin America.
The company repeated its forecast for market demand, which has been rising steadily over the past year, to increase somewhat sequentially in the near term, usually defined by the company as the current quarter.
FX ONLY MARGIN THREAT
Operating margins have shot up at the group amid the resurgent demand, rising to 21.3 percent in the third quarter from a year-ago 15.9 percent. Leten said the firm margins were sustainable with currency swings the only threat at present.
"That is what could happen short term. I do not see any other reason short term," he said. "(And) if I look at recent developments of the euro today, at 1.29 to the dollar, I am a very happy man."
Ahead of the capital market day, some analysts had expected Atlas to raise its 15 percent operating margin target since the the company has beaten it in all but two quarters since the beginning of 2005.
However, Leten said the company was sticking to its target for now and was focusing on boosting growth and returns on capital, though targets were always under review.
"I do not think a specific EBIT-target is the right target setting for the business cycle that we are in. We are not a company that is in trouble. I look to growth, but also how much you have to invest in it, really capital employed," he said. (Reporting by Niklas Pollard and Johannes Hellstrom; Editing by Jon Loades-Carter and Dan Lalor)