Lockheed Martin , L-3 Communications and Raytheon Co beat Wall Street earnings expectations, aided by cost-cutting and higher sales, boosting shares of U.S. defense contractors.

Industry leader Lockheed Martin forecast 2011 profit above analysts' estimates, and L-3 boosted its full-year outlook. Raytheon forecast higher profit for the year.

Defense contractors have come under pressure as governments eye defense spending cuts in a bid to reduce deficits. The sector saw steady increases following the September 11, 2001, attacks as U.S. defense spending ramped up.

Earlier this month the U.S. Defense Department said it would cut $78 billion in spending over five years.

To cope, defense companies have reduced staff, put non-core divisions up for sale and are looking to acquire companies with niche technologies that are in demand.

As we go into 2011, our focus on taking costs out of the business will continue, Raytheon Chief Financial Officer Dave Wajsgras told Reuters.

The S&P Aerospace index <.GSPAERO> was up 1 percent in Thursday morning trade. Lockheed Martin rose 1.5 percent to $79.56 on the New York Stock Exchange. Raytheon gained 12 cents to $51.72, and L-3 was up 2.1 percent to $78.99.

Lockheed, the world's biggest defense contractor, said quarterly profit from continuing operations came to $2.30 a share. Analysts expected $2.11. Sales rose about 5 percent to $12.79 billion.

Missile maker Raytheon reported fourth-quarter earnings, adjusted for one-time items, of $1.47 a share, well above analysts' average forecast of $1.16, according to Thomson Reuters I/B/E/S. Sales rose 3 percent to $6.89 billion.

L-3, which makes explosive-detection devices and aviation products, posted an 18 percent jump in quarterly profit. Net sales increased 1 percent to $4.3 billion.

Metal parts maker Precision Castparts Corp
quarterly profit rose on a 16.5 percent increase in sales. Net profit for the fiscal third quarter was $1.78 per share, up from $1.64 a year earlier.

Earnings from continuing operations totaled $258.7 million, or $1.80 per share, meeting Wall Street expectations.

(Reporting by Karen Jacobs in Atlanta and Kyle Peterson in Chicago)