UPDATE 1-Chemring buoyed by US order for anti-missile flare

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LONDON, March 13 (Reuters) - British military consumables maker Chemring Group Plc (CHG.L) said on Thursday it had won a U.S. Department of Defense contract to supply M212 flares which protect helicopters from guided missiles, lifting its shares.

Chief Executive David Price said the five-year contract, worth up to $383 million, was Chemring's largest from the U.S. military and "significantly enhances our long-term position in the U.S. market."

Chemring shares, which have risen nearly tenfold in the past five years, were up 2.7 percent at 2,335 pence by 1000 GMT to be the top gainer among London's leading 350 stocks .FTLC and value the business at 750 million pounds ($1.51 billion).

Chemring also makes countermeasures for use on land and at sea, and ammunition and explosives

Numis Securities analysts, who have an "add" rating on Chemring stock, said: "At full value this indicates potentially a 9 percent upgrade to outer-year earnings. We are raising our price target to 2,600 pence (from 2,255 pence)".

The brokerage said more contracts may be on the way.

"At the results Chemring identified three further large five-year contracts to be let this year including one this month which is a `companion flare' to this contract ... (which) has a very good chance of being ordered in the light of today's announcement".

On Jan. 22, Chemring posted a 57 percent rise in underlying annual profit and said 2008 should be another year of strong growth, underpinned by a record book.

The company's stock has outperformed other London-listed aerospace and defence companies .FTASX2710 by 23 percent over the past 12 months. (Reporting by Dan Lalor; Editing by Erica Billingham)