Smith & Nephew beat forecasts for the third quarter as patients and governments began to resume spending on surgical procedures after cutting back during the recession.

Europe's leading maker of replacement hips and knees said on Friday that adjusted earnings per share were 16.8 cents against an average of 14 cents expected by 7 analysts polled by Thomson Reuters I/B/E/S.

Revenues for the third quarter increased by 1 percent to $915 million, compared with an average of $908 million expected by 6 analysts polled by Thomson Reuters I/B/E/S.

The company also maintained its guidance, and said its margin improved 410 basis points to 22.8 percent. It plans to lift its trading margin to 24.5 percent by 2010.

Chief Executive David Illingworth said in a statement: Market conditions remain challenging, but are showing some early signs of stabilising.

(Reporting by Ben Deighton; Editing by David Jones)