UPDATE 2-Volvo raises North American outlook after solid Q2

* Q2 core profit SEK 8.54 bln vs forecast 8.48 bln

* Trucks order intake up 22 pct vs forecast 12 pct

* Construction division buoys earnings

* Stretched supply chain dents trucks margin

* Trucks margin in focus as shares fall 3.6 pct in early trade (Adds analyst comment, detail, background)

STOCKHOLM, July 19 (Reuters) - Swedish truck maker Volvo raised its forecast for the North American market on Wednesday after a solid second quarter that saw order intake pick up across the group.

Adjusted operating profit rose to 8.54 billion Swedish crowns ($1.03 billion) from 6.13 billion and edged the 8.48 billion forecast by analysts polled by analysts.

Order intake at the group, which sells Volvo trucks as well as brands such as Mack, Renault and UD Trucks, rose 22 percent, beating the 12 percent increase forecast by analysts.

Shares in Volvo, which competes with Germany's Daimler and Volkswagen, have jumped nearly 40 percent this year on robust demand and better margins following a 10-billion-crown cost-cutting drive.

Volvo is benefiting from European demand for heavy-duty trucks at historically high levels and there are growing signs of an upturn in North America.

"Recent trends on the truck markets continue with good demand in Europe, including a distinct recovery in Russia, and a gradual improvement in North and South America," the company said in a statement.

Sweden's biggest corporation by revenue raised its 2017 sales outlook for the North American heavy truck market to 225,000 trucks from 215,000 and kept its guidance for robust industry-wide sales in Europe.

With demand so strong, Volvo said a stretched supply chain had weighed on margins in its truck division while its construction equipment business, which accounts for a fifth of turnover, helped buoy earnings.

The dip in profitability at the truck business weighed on Volvo shares in early trade with the stock down 3.6 percent by 0709 GMT.

Overall, Gothenburg-based Volvo reported an adjusted operating margin of 9.7 percent in the second quarter, up from 7.8 percent a year ago, in line with analysts' expectations.

"The real positive is that the order intake is so strong," Handelsbanken Capital Markets analyst Hampus Engellau said.

"The question is if the market will choose to focus on a softer margin in trucks or continued extremely strong order bookings in Europe. I would argue one should focus on the order intake."

Volvo is the first of Europe's major truck makers to release second-quarter results, with Daimler and Volkswagen, as well as Iveco trucks maker CNH Industrial all due next week. U.S. maker Paccar Inc, whose brands include Peterbilt and Kenworth, also reports next week.

Volvo is on track to record its highest annual level of profitability since the 1999 sale of its car business, now owned by China's Zhejiang Geely Holding Group.

A recovery in demand in China has helped bolster order intake and profits at Volvo's construction equipment arm after several weak years.

The adjusted operating margin at Volvo Construction Equipment jumped to 13.3 percent from 5.9 percent and Volvo raised its outlook for China for a second consecutive quarter.

($1 = 8.3009 Swedish crowns) (Reporting by Niklas Pollard and Johannes Hellstrom; editing by Jason Neely)