UPDATE 2-Stryker profit on target, share rise

* Adjusted profit of 69 cents is in line with analysts

* Company resolves biotech warning letter from FDA

* Sales of orthopedic implants rise 5.5 percent

* Tightens full-year EPS forecast at low end of range

* Shares rise 3.4 percent in after-hours trading (Adds earnings details, details from conference call)

CHICAGO, Oct 20 (Reuters) - Stryker Corp (SYK.N), a maker of orthopedic devices and other hospital products, said on Tuesday its quarterly net earnings fell 16 percent amid lower shipments of its medical and surgical equipment.

But its adjusted earnings met Wall Street expectations, and the company said sales in all of its businesses, including artificial hip and knee implants, accelerated from prior quarters even though the third quarter typically is the company's weakest.

Sales of hospital products have been especially hard hit in the economic downturn as hospitals, struggling with rising numbers of uninsured patients and declining endowments, have held off on purchases.

While the economic environment remains challenging, the capital spending cycle appears to be bottoming, Stryker executives said on a post-earnings conference call with analysts.

Stryker shares rose 3.4 percent from a close Tuesday of $45.28.

The Kalamazoo, Michigan-based company said its third-quarter net earnings were $229 million, or 57 cents per share, down from $274 million, or 66 cents per share, a year ago.

The company said it earned 69 cents a share excluding special items, in line with the average analyst estimate according to Thomson Reuters I/B/E/S.

Net sales in the quarter were flat at $1.65 billion, compared with a year ago.

Sales of orthopedic implants such as artificial hips and knees rose 5.5 percent, compared with a year ago, while sales of medical and surgical equipment fell 7.7 percent.

Stryker tightened its adjusted full-year earnings forecast to a range of $2.90 to $3.00 a share, from its prior outlook of $2.90 to $3.10 a share.

The company said it has resolved a warning letter with the U.S. Food and Drug Administration over quality and compliance issues in its biotechnology business dating back to April 2008, although other warning letters remain outstanding. (Reporting by Susan Kelly; Editing by Andre Grenon, Gary Hill)