UPDATE 2-Fiat to cut Italy car output, seeks support on jobs

* Fiat calls for government, union support

* To stop car production at Sicily plant

* Industry watchers say still needs to grow bigger

(Recasts, adds comments from analysts)

ROME, June 18 (Reuters) - Fiat (FIA.MI) called on Italy's government and unions to back its efforts to maintain jobs while cutting output in the country and secured a commitment from Rome on Thursday for investment near two plants that could face cuts.

"Maintaining job levels in the face of the crisis we are enduring on the markets is not easy," Fiat Chief Executive Sergio Marchionne said in a statement issued after the three-way meeting.

"The production steps ... can guarantee this in part ... (but) there are other equally important elements."

Marchionne is trying to steer Fiat through the crisis hitting carmakers worldwide as demand slumps, and has also taken on the task of steering Chrysler back to health after taking a 20 percent stake in the U.S. carmaker.

In the statement, Fiat said it planned to halt car output at a plant in Sicily in 2011 while also planning changes to production, including a new platform, at a site near Naples.

The government in turn said there would be investment to revive industry in areas around the two plants.

"In the areas of greatest crisis ... (there could be investment) with resources partly from the state and partly from private players to help the reconstruction process," Industry Minister Claudio Scajola said after the meeting.

The CGIL union, one of Italy's biggest, said it was ready to cooperate with Fiat but still wanted job guarantees. Fiat said temporary layoffs, part paid by the state, could not be avoided while continued incentives for its environmentally-friendly cars were indispensible.

"It's the moment for all forces to unite: government, unions and the company," Marchionne said in the statement.

STILL LACKS SURVIVAL SIZE