UPDATE 1-Avis Europe says volumes to date lower but in line

* Says diversification helps offset impact of downturn

* Says cost cuts to continue, tightens fleet capacity

* Sees free cash-flow positive for full year

* Cuts 5 pct more jobs, sees H1 charge of 10 mln euros (Adds details)

May 14 (Reuters) - Car rental firm Avis Europe Plc (AVE.L) said on Thursday overall volumes in the year to date were lower than last year's but in line with its expectations, due to difficult demand, particularly in Spain.

The company also said it reduced headquarters staff by a further 5 percent and expected related charges of about 10 million euros ($13.56 million) in the first half of 2009.

It said seasonal cash outflow ahead of the peak summer season was expected to be lower than last year due to "intensive management" of its fleet but expected to be free cash flow positive for the full year.

Avis Europe said its geographic spread and diversified customer portfolio as well as tightened fleet capacity, revenue management and control of fleet processes were helping to mitigate the impact of the severe economic downturn. It said average forward booking period continued to shorten, reducing visibility on forward reservations.

Avis also said it continued to implement a group-wide recruitment freeze, control seasonal staff and implement a salary freeze.

Avis Europe shares were flat at 15 pence in morning trade on the London Stock Exchange. ($1=.7373 Euro) (Reporting by Austin Lobo in Bangalore; Editing by Gopakumar Warrier)