UPDATE 2-SNC Lavalin profit declines less than expected, shrs up

* Maintains full-year forecast

* Mining, better execution boost earnings

* Revenue up 11 pct although backlog dips

* SNC under new CEO since Oct. 1

Nov 2 (Reuters) - Canadian construction and engineering company SNC Lavalin Group Inc, under investigations for alleged bribery, reported on Friday a narrower-than-expected 8 percent decline in third-quarter profit, and its shares rose more than 4 percent.

One of the world's largest engineering operations, the company maintained its forecast for full-year earnings after cutting it last quarter.

``We are quite encouraged and relieved,'' said Frederic Bastien, an analyst with Raymond James based in Vancouver. ``The fact that they are reaffirming their guidance for the year implies a good quarter for the fourth quarter.''

The results were welcomed by SNC shareholders, who in the past year have contended with the resignation of the company's chief executive. The company has accused Pierre Duhaime of authorizing $56 million in payments to agents on nonexistent construction projects. Canadian police are investigating.

They are also investigating bribery allegations against SNC executives in respect to a US$1.2 billion bridge project in Bangladesh. The World Bank has suspended its loan for the development and temporarily banned an SNC subsidiary from bidding on its contracts in the country.

Shares in SNC, which at one point this year were down more than 60 percent in value, rose C$1.67 to C$41.95 on the Toronto Stock Exchange after the company's financial results were announced.

The company said on Friday that its net income attributable to shareholders fell to C$114.9 million (US$115.21 million), or 76 Canadian cents per share, in the three months to the end of September due to weaker performances in its infrastructure and environment businesses. That was well above the 64 Canadian cents per share that analysts, on average. were expecting, according to Thomson Reuters I/B/E/S data.

The company's mining business in particular performed far better than expected.

``This is a business that has been winning a number of contracts ... but we haven't seen that translate into better results. It is finally hitting the bottom line now,'' Bastien said.

Revenue at the 101-year-old company, which is based in Montreal, rose 11 percent to C$2.0 billion in the third quarter, although its backlog fell to C$9.9 billion at the end of September from $10.1 billion at the end of December 2011.

The company, which has been under the leadership of new CEO Robert Card since Oct. 1, reaffirmed its forecast for full-year earnings of C$325 million to C$340 million.

Maxim Sytchev, an analyst at AltaCorp Capital in Toronto, said, ``When I spoke to clients before the quarter, there was a sense that the business was disintegrating. But we are not seeing that, which is a definitely very positive dynamic.''