UPDATE 1-Smith & Nephew second-quarter earnings rise 19 pct

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LONDON, Aug 2 (Reuters) - Smith & Nephew (SN.L), Europe's biggest medical devices firm, posted a 19 percent rise in second-quarter underlying earnings on Thursday, boosted by sales of replacement hips, and said its markets remained favourable.

The British firm, which also makes wound treatments and keyhole surgery instruments, said it made earnings per share before goodwill of 12.4. U.S. cents in the three months to June 30 on a 12 percent rise in revenues to $813 million.

Analysts forecasts ranged from 11 cents to 13 cents for earnings and $752 million to $828 million for revenues, according to a company poll.

"The revenue outlook for the year for the individual businesses and for the business as a whole continues to be favourable and is unchanged from the first quarter," Smith & Nephew (S&N) said in a statement.

It also said its drive to improve profitability had started well.

In May, S&N unveiled plans to boost trading margins by at least 1 percent a year for the next four years by improving information technology, procurement and sales and marketing, and using more low-cost manufacturing and sourcing.

It has said in the past that the margins of its different businesses lag their "best in class" by between 3 and 5 percentage points, in part because of its investment in innovation and due to its smaller size than big U.S. rivals.

At 1015 GMT, S&N shares were up 1.7 percent at 596 pence, valuing the firm at about 5.3 billion pounds ($10.8 billion).

The stock has outperformed the European healthcare sector .SXDP by about 15 percent this year.

((Reporting by Mark Potter, Editing by Mike Elliott

Reuters Messaging: rm://mark.potter.reuters.com@reuters.net

Tel: +44 20 7542 7717, Fax: +44 20 7542 9025))

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