* North American recovery tough to call
* Focus on managing costs, asset utilization
Canada's second-biggest railway, which announced a dividend and capital spending increase after markets on Thursday, said the 2010 economic environment has improved from last year, but the outlook remains uncertain.
"The lessons learned in difficult times are serving us well as we move into the second quarter of 2010," Chief Executive Fred Green said via webcast from the company's annual meeting in Calgary.
He added: "The Asia-driven demand for coal and potash is encouraging, the domestic North American economic recovery is less certain." He said CP was focusing on managing costs and improving asset utilization.
In 2009, the railway faced an unprecedented drop in traffic volumes, but it worked to strengthen its balance sheet and improve liquidity with debt and equity issues and prepayments of over C$500 million ($471.7 million) to pension plans.
The Calgary-based company, which hiked its 2010 capital spending budget by C$70 million to between C$750 million and C$800 million, plans to hold its investor day June 2.
Shares of CP were 2.2 percent higher at C$56.01 on the Toronto Stock Exchange and up 2.6 percent on New York at $52.73. ($1=$1.06 Canadian) (Reporting by Susan Taylor; editing by Janet Guttsman)