UPDATE 2-Adecco paints gloomy outlook after Q4 loss

* Adecco swings to net loss in fourth quarter

* Was expected to post a net profit of 98 million euros

* Says no signs of improvement in near future

* More job cuts to come in first half of 2009

* Shares fall 8 percent

ZURICH, March 4 - Adecco, the world's largest staffing company, painted a bleak outlook for 2009 and said it would slash more jobs after posting a surprise fourth-quarter loss as the economic slump bites, hitting shares.

"Looking into the near future, management currently sees no signs of improvement," the group said in a statement on Wednesday.

Businesses across Europe are cutting back on staff at a record pace to preserve cash and the euro zone's key service sector indicator slumped to a new low on Wednesday.

Adecco's fourth-quarter net loss of 22 million euros ($27.83 million) fell well short of the 98 million-euro profit forecast in a Reuters poll as the group was also hit by impairment charges of 116 million euros.

Staffing companies, such as Dutch group Randstad and America's Manpower, have all been hit as firms across the world scale back on hiring in the fight against economic slowdown.

By 1008 GMT, shares in the group had slumped some 8 percent to 31.16 Swiss francs, underperforming a 3.3 percent rise in the DJ Stoxx industrial goods and services index.

"This set of figures is likely to disappoint investors. The ill-fated start to the year and the outlook do not leave any hope for the future development of the business year," analysts at Wegelin said in a note.

"Obviously the economic weakness is hitting the staffing firm hard, which was expected, but not to this extent," they said.

Revenue at Adecco slumped 25 percent in January after tumbling 15 percent to 4.6 billion euros in the fourth quarter, with France, the United States, Germany, Britain and Italy all posting double-digit percentage drops in revenue, Adecco said.

"For the first quarter, we expect key markets such as France, UK and the USA to be weaker than in the fourth quarter," Chief Financial Officer Dominik de Daniel told Reuters.

Dutch rival USG People posted a fourth-quarter loss of 77 million euros on Wednesday and is preserving cash by proposing the payment of its dividend in shares.

In December, Adecco said it was bracing itself for a harder and longer downturn than previously anticipated.

The group is still sticking to its mid-term margin target on earnings before interest, tax and amortisation (EBITA) of more than 5 percent, but cautioned this goal could only be reached in a "favourable market environment".

COST CUTTING

The group, which cut 6 percent of its workforce in the fourth quarter, will cut jobs further in the first half of 2009 as the challenging economic environment persists and Adecco looks to protect its margins.

The pace at which Adecco cuts jobs is set to accelerate and there will be a double-digit percentage decline in its workforce by the end of March compared with the same period a year ago, de Daniel said on a conference call.

The group plans to spend 50 million euros in the first half of 2009 on reducing costs, de Daniel said.

The group's operating margin would shrink further throughout the year after falling to -0.1 percent in the fourth quarter from 4.6 percent in the previous year, de Daniel told Reuters.

The group has already spent 32 million euros on cutting jobs and closing branches and expects to see the benefits of these measures in the first half.

Adecco trades at around 10.7 times expected 2010 earnings, while Randstad trades at just over 6 times.