NEW YORK -— Vertigo, the better-priced contemporary line, has returned to Manhattan's East Side with a store created in the mood of Paris in the Forties with a twist of modernism.

With a reconstituted and broader collection, the 5,000- squarefoot store at 36 East 60th Street has been renamed Vertigo and Friends and is expected to hit $4 million in first-year sales, according to Larry Kaynes, an owner of the store, which is a joint venture with Vertigo U.S.A., a sub- sidiary of Vertigo, the Paris-based manufacturer Ultimately, Kaynes expects the store, which he considers a flagship, to reach $5 million to $6 million in annual sales.

He also said that several additional Manhattan sites are already being sought, and that he’s partial to Bleecker Street, SoHo, Third Avenue in the Seventies, and Columbus Avenue on the Upper West Side. He is also considering stores in Connecticut, New Jersey and Westchester County, N.Y., but has no additional leases finalized at this point.

The 60th Street unit, located between Park and Madison Avenues on the same block as Dooney & Bourke, opened Sept. 7. Two years ago, Vertigo had a store on Madison and 65th Street that closed because thecompany thought it was too small and  wouldn‘t be able to handle a more comprehensive and upgraded collection.

“The line had to be redesigned," Kaynes said. “We’ve upgraded it. It’s a bit more modern, and we are using more expensive fabrics. Prices are about 25 percent higher, and we are much more fashion-forward. We want to brand Vertigo as a total collection.”

The 20-year-old Vertigo does about $30 million in wholesale and retail volume combined, according to Kaynes. The French company has a showroom here and operates four Vertigo stores in Florida, three stores in Paris and one in California.

Jean-Marc Zarka is founder, president and chief ex- ecutive officer ofvertigo; Philippe Pire is a partner and vice president. Other partners are Daniel Mimoun, who is also the designer, and Simon Attias, who runs the non-U.S. operations.