* Union head says move will save 1,200 direct jobs

* Shift was set to be phased out in two weeks

* Company shelves plans to sell Viper business (Adds details, background, Chrysler comments, Viper news)

By John McCrank

TORONTO, July 10 (Reuters) - Chrysler has reversed a decision to cancel the third shift at its minivan plant in Windsor, Ontario, thanks to rising demand for the vehicles in the second half of the year, the company said on Friday.

The Canadian Auto Workers union said the decision to retain the shift will save 1,200 direct jobs in the southwestern Ontario city, which has been hard hit by the recession and has the highest unemployment rate of any major Canadian center at around 14 percent.

Chrysler recently emerged from Chapter 11 bankruptcy protection in the United States by selling most of its good assets to Fiat SpA (FIA.MI: Quote, Profile, Research). It said in March it planned to cut the shift as part of an effort to restructure its operations in the face of slumping sales.

"It's great news for 1,200 CAW Local 444 members out at the Chrysler plant and obviously the spinoff jobs that come with it," CAW President Ken Lewenza said in an interview.

"Obviously, it's a strong message from Chrysler that they plan to maintain their market share lead in the minivan segment."