UPDATE 4-BA hints worst over for business travel, shares up

* H1 pretax loss 292 mln stg vs 52 mln stg profit

* Sees FY revenue 1 bln stg lower

* To cut another 1,200 jobs next year

* Decline in business traffic slows

* Shares 6 percent higher, top FTSE 100 gainer

(Adds analyst comment, updates shares, details)

By Rhys Jones

LONDON, Nov 6 (Reuters) - British Airways (BAY.L) signalled business is stabilising, eclipsing news of a worse than expected first half loss and a prediction that revenue would slump by 1 billion pounds ($1.7 billion) this year.

Shares in the company jumped as much as 8 percent, making it the biggest gainer on the FTSE 100 index .FTSE, as the company also said revenue from business travellers was back at pre-credit crunch levels by one industry measure.

"The market was fearing something worse but BA's tone was more optimistic than it has been -- it can see light at the end of the tunnel now," said Evolution analyst Nick Cunningham.

"As we move into winter, it's like BA can see the spring."

BA, whose alliance with American Airlines (AMR.N) and Spain's Iberia (IBLA.MC) is being scrutinised by European and U.S. competition watchdogs, on Friday reported a pretax loss for the six months to end-September of 292 million pounds ($482.4 million), while revenues fell 13.7 percent to 4.1 billion.

The airline, which has reduced operating costs by 8.7 percent, cutting free meals on some flights, said it would slash more costs, with another 1,200 staff losing their jobs next year taking the total number of job losses to 4,900.

"Our revenues are likely to be about 1 billion pounds lower this year so we're determined to reduce costs further to ensure we return to acceptable levels of profitability," Chief Executive Willie Walsh told reporters on a conference call, adding that BA was "riding along the bottom" of the downturn.

Shares in BA, which have risen 27 percent in the last quarter, were 5.9 percent higher at 197.2 pence by 1439 GMT, valuing the group at around 2.5 billion pounds.

Shares in peers Lufthansa (LHAG.DE) and Air France-KLM (AIRF.PA), which have also cut their bloated cost bases in response to the recession, both rose.