REFILE-UPDATE 2-Hays sees slowdown as economy concerns weigh

* Q2 group net fees up 8 pct

* UK & Ireland down 7 pct, Asia Pacific up 11 pct

* Continental Europe & rest of world up 20 pct

* Shares down 1.6 pct

By Neil Maidment

LONDON, Jan 10 (Reuters) - Tough economic conditions have hit the confidence of employers and jobseekers alike in recent months, British recruitment company Hays said in reporting a drop in business in its home market and a slowdown in growth overseas.

Hays, which specialises in placing office workers such as accountants, IT workers and secretaries, said on Tuesday net fees -- or gross profit -- rose 8 percent in its second quarter to end-December, down from 15 percent in the previous quarter.

"Over the last two to three months the economy and markets have got more uncertain, the discussions we have with our clients on a daily basis are more cautious than they were two or three months ago and therefore we are going to run our business the same," Finance Director Paul Venables told reporters.

"We are in a different position than we were six months ago. Then both our client base and as an industry we were full steam ahead and now we are in a cautious position."

Shares in Hays, which said it was now focusing on costs and expenditure rather than expanding its own workforce, were down 1.6 percent at 64.4 pence at 0911 GMT.

The firm, which makes 70 percent of its net fees overseas, said its UK banking and public sector markets continued to struggle, with net fees dropping 7 percent overall.

Growth in mainland Europe and Asia Pacific helped offset this, albeit at slower rates than those in the first quarter. Fees in Europe, led by Germany and France, grew by 20 percent compared to 34 percent in its first quarter. Asia Pacific, led by Australia, grew by 11 percent compared to 21 percent last quarter.

"This is not a Lehmans moment, this is not where candidate confidence has collapsed. I think we are seeing candidates being a bit more cautious, but we are seeing clients outside of banking replace leavers. Everybody is looking at the broader macro economy," Venables said.

Hays' permanent recruitment market has been hit particularly hard by global conditions as potential jobseekers are unwilling to move positions in such uncertain times. The market, which accounts for just over 40 percent of group fees, slowed from 15 percent growth to 1 percent for the quarter.

"I think there is clearly great uncertainty in the permanent recruitment market at the moment. The minute you have uncertainty in the press and newspapers over a period of three or four months it will always impact candidate confidence and we saw less candidates looking to change jobs and in the end that's what drives our activity," Venables added.

On Friday rival recruiter Robert Walters said that it too had entered 2012 with caution as tough economic conditions and weak candidate confidence weighed on the sector.

Investec Securities analyst Robert Morton retained his 'buy' rating on Hays based on growth prospects as economies recover but wrote in a note that 2012 could be tough.

"The group has traded satisfactorily in the second quarter of the year, although growth has slowed markedly. The global economic slowdown and uncertainty has clearly impacted on the recruitment industry with both client and candidate confidence affected and calendar 2012 is likely to be a difficult year for both Hays and the recruitment industry in general," he said.