UPDATE 2-More U.S. CEOs see economy slowing-Business Council

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CHICAGO, Oct 11 (Reuters) - More top U.S. chief executives believe the U.S. and global economies are going to weaken over the next six months than expect improvement, according to a survey released on Thursday.

A joint poll by the Business Council and the Conference Board found that 44.3 percent of 61 top CEOs forecast economic conditions in their own industry to get worse over the next six months, while 16.4 percent see improvement. About 39 percent expect conditions to remain the same.

In February, only 24.4 percent expected conditions to get worse, while almost 60 percent saw conditions remaining the same. About 16 percent saw improvement at the time.

"Results ... show markedly more pessimism about current U.S. business conditions compared to other parts of the world," Stanley O'Neal, vice chairman of the group and CEO of Merrill Lynch and Co Inc MER.N, wrote in a preface to the survey.

The findings suggest the weak U.S. housing sector and tight credit markets have taken a toll on business. One-third of the CEOs ranked the recent credit and financial market turmoil as "most important" and another 40 percent as "very important" in shaping their 2008 outlook.

The survey went out before the Federal Reserve cut interest rates on Sept. 18, with about two-thirds collected before then.

About 55 percent of the CEOs said business confidence was either "very" or "most important," up from 41 percent in February. Sixty-three percent believe Fed policy is "very" or "most important," up from 47 percent in February, and almost 70 percent felt the Fed should cut interest rates.

The survey found almost half of the CEOs expect 2008 U.S. economic growth in the range of 2.1 percent to 3 percent, and more than two-thirds expect the Fed funds rate in February 2008 to be 4.9 percent or lower.

More than half also expect profits to slow, but investment, hiring plans and wage increases appear fairly stable, according to the poll. Despite the increased pessimism, two-thirds said they expect their pricing power to remain constant.

More than 60 percent see health-care costs as an obstacle to hiring new workers, but those who felt employee benefit costs will accelerate over the next 12 months fell to 30 percent, the lowest number in three years.

On Wednesday, General Motors Corp GM.N finalized a deal and Chrysler [CBS.UL] reached a tentative agreement with the United Auto Workers union allowing the automakers to reduce their health care liabilities by establishing union-aligned trust funds to assume responsibility for retiree health care.

The CEOs in the survey are more pessimistic about conditions in the United States as 58.3 percent expect things to get worse over the next six months, up from 24.4 percent in February. Outside the United States, one-third of the companies responding in the survey expect things to weaken, up from almost 13 percent last February.

Fifty-three percent of respondents said they expect global growth to slow in 2008 compared with only a third in February, according to the survey.

Even in the growth market of China, 17.5 percent of the executives expect things to get worse, up from 8.7 percent in February, according to the poll. Those expecting things to get better in China has fallen to 12.3 percent from almost 15 percent. The rates for Asia and Europe showed similar increases among the pessimists.

The Business Council is a group of 200 top U.S. chief executive officers that counts among its members the top executives at companies including General Electric Co (GE.N), American Express Co (AXP.N) and Johnson & Johnson (JNJ.N). (Reporting by Ben Klayman)