Google chief executive Eric Schmidt said on Wednesday that the worst of the advertising recession is over, and pointed to signs of a recovery in both the U.S. and Europe, sending shares up 3 percent.

NEW YORK, Oct 7 (Reuters) - Google Inc Chief Executive Eric Schmidt said on Wednesday that the worst of the advertising recession is over, and pointed to signs of a recovery in both the U.S. and Europe, sending shares up 3 percent.

Speaking to a group of reporters in New York along with Google co-founder Sergey Brin, Schmidt said that the largest U.S. Internet search engine has increased its hiring and investment in anticipation of a recovery.

"The worst is behind us," he said. "We're clearly seeing aspects of recovery, not just in the U.S. but also Europe."

Google first started to see signs of a recovery in May and June, Schmidt said, following a period in which the slump in advertising spending undercut the company's revenue growth and the price of its search ads.

Earlier on Wednesday, Oppenheimer & Co raised its price target on Google shares by 15 percent to $565 and maintained its "outperform" rating on expectations of strong third-quarter results. Google reports earnings on Oct. 15.

With the economy on the rebound, Google plans to resume its average pace of one acquisition per month, Schmidt said.

Google will likely forage among start-ups that are building products and services the company considers strategic to its businesses, including cloud computing, mapping, search and advertising, he said.

"Half of the most interesting things at Google came out of small acquisitions," Schmidt added, pointing to a deal Brin and co-founder Larry Page did that eventually led to the creation of Android, Google's mobile software platform.

Although he did not rule out large deals, Schmidt said they are tougher to doboth because of the large expense that may not bring immediate returns and the likelihood of antitrust scrutiny, "because the competitors will come up with some artifice of what we're doing and try to slow us down."

Google's purchases of DoubleClick for $3.1 billion and YouTube for $1.65 billion are among its largest acquisitions.

Separately on Wednesday, a judge set Nov. 9 as the deadline by which changes to a settlement between Google and the Authors Guild and others should be presented in court.

"We're very very happy with the settlement we've reached," Schmidt said at the meeting with reporters. But "if we need to, we'll make appropriate revisions."

Google's plan to create a massive digital library has been praised for bringing broad access to books. But it has been criticized on antitrust and copyright grounds.

Shares of Google, which is due to report earnings next week, rose 3 percent to $513.75 in afternoon trading. (Reporting by Anupreeta Das, editing by Paul Thomasch and Gerald E. McCormick)