* Q4 group LFL net fees down 40 percent
* Permanent placements down 57 percent on last year
* Reduces its headcount by 8 percent in Q4
* Says short-term outlook bleak
* Shares 1 percent up by 0755 GMT
(Adds company, analyst comment, shares, further details)
By Rhys Jones
LONDON, July 9 (Reuters) - Hays, Britain's biggest recruitment firm, said demand for workers continued to fall in the fourth quarter as recession-hit companies cut costs and staff, adding that the short-term outlook was bleak.
Hays, which last year placed 80,000 people into permanent jobs and found temporary work for some 300,000 people, on Thursday said group net fees fell 40 percent in the three months to the end of June compared with the same period last year.
"The 40 percent fall shows it's a very tough labour market globally," Finance Director Paul Venables told reporters on a conference call. "The rate of decline has slowed slightly but it's too early to call stabilisation."
Hays, whose largest markets are Britain and Australia, said net fees from permanent placements fell 57 percent from last year, while net fees in its temporary business fell 23 percent.
"Demand continues to weaken in both our temporary and permanent placement businesses but on the permanent side it is still very weak," said Venables.
Hays, which in February reported a 16 percent fall in first-half operating profit, said net fees fell 45 percent during the latest quarter in the UK and Ireland as market conditions deteriorated further across the private sector.
Its British public sector business continued to be relatively resilient, however, although fees decreased by 3 percent on last year.
"In the UK, the only area of stability we have seen is in the City of London where there has been a bit more hiring but at levels significantly below a year or two ago," said Venables.
Shares in Hays, which have fallen 12 percent in the last month, were 1 percent up by 0755 GMT, valuing the group at around 1.2 billion pounds.
"There is no real let up in the decline in trading but there is confidence in the balance sheet as cash flow remains positive and the dividend is safe," says Blue Oar analyst Andy Smith.
Hays is seen reporting an operating profit of 158 million pounds ($253.8 million) for the year to end-June, according to 19 analysts polled by Reuters Estimates, down from 250 million pounds the previous year.
"We're happy with the consensus of 158 million pounds and believe that level of performance is very good in what has been a very tough job market," said Venables.
Hays' main UK rival, Michael Page, said on Tuesday it had seen a stabilisation in some markets but did not expect a firm recovery until next year.
Switzerland's Adecco, the world's biggest staffing firm, recently posted an 83 percent drop in first-quarter profit, and, unlike American rival Manpower, said it expects the jobs market slump to persist.
The number of Britons claiming jobless benefit rose less than expected in May but the rise was still enough the push the unemployment rate to its highest in more than a decade, according to official data..
Hays, which cut a fifth of its own staff in 2008 to protect margins, said it had reduced its headcount by a further 8 percent during the quarter. ($1=.6224 Pound) (Editing by James Davey, Hans Peters and Simon Jessop)