(Refiles to add dropped words "the industry" in 7th paragraph)
* Ford fourth-quarter profit surpasses analyst estimates
* Outlook weaker than some analysts expect
* Euro zone likely in recession for the full year-CFO
By Deepa Seetharaman and Paul Lienert
DETROIT, Jan 29 (Reuters) - Ford Motor Co forecast a $2 billion loss in Europe this year, hurt by a punishing recession that could drive down industry sales in the region beyond 2012's nearly 20-year low.
Ford said on Tuesday its sales outlook was deteriorating in Europe and the 2013 loss would be worse than the $1.75 billion deficit in 2012. The automaker is closing plants and slashing costs.
By contrast, Ford, the No. 2 U.S. automaker, expects to earn more money in North America in 2013 and forecast 10 percent margins. North America was its chief source of strength last year and helped it to beat Wall Street estimates in the fourth quarter.
Still, the overall outlook was weaker than some analysts expected. The shares fell 5.7 percent to $12.99, its sharpest drop since August 2011.
"Upon first glance, we believe the guidance could prove a bit conservative in North America, considering the strong line-up, expected share gains and rational pricing," RBC Capital Markets analyst Joseph Spak said in a research note.
"Additionally, while we don't doubt the industry deterioration in Europe, we believe that management could be setting the bar low," Spak added.
In South America and Asia, Ford expects to break even this year. Overall, Ford looks for total operating profit this year to match 2012 results as market share gains in the United States offset Europe, where Ford expects the industry to sell between 13 million and 13.5 million vehicles this year.
Ford said industry sales last year in the 19 markets it tracks in Europe were the lowest since 1995.
"We're likely to see, in the euro zone, a recession for the full year," Chief Financial Officer Bob Shanks told reporters after the company reported quarterly results.
"Clearly we still have some difficult times in front of us (in Europe)," Shanks said. "But we do think it will probably bottom this year."
Ford reported a per-share pretax operating profit of 31 cents in the fourth quarter, better than the average analyst estimate of 25 cents per share, according to Thomson Reuters I/B/E/S. Fourth-quarter revenue totaled $36.5 billion.
Ford earned nearly $1.9 billion in North America in the quarter, almost $1 billion better than the fourth quarter of 2011. It lost $732 million in Europe, much worse than the $190 million loss it reported a year earlier.
The company spent $1.2 billion on lump-sum pension buyouts last year, but did not say how many salaried retirees took the offer.
The improved North American performance reflected turnaround efforts by Alan Mulally, hired as chief executive in 2006. Under Mulally, Ford avoided government bailouts needed by rivals General Motors Co and Chrysler Group LLC in 2009.
Jefferies analyst Peter Nesvold estimated Ford cut capacity in North America by a little more than one-fifth from 2006 to 2009. Higher vehicle prices commanded an additional $10 billion in revenues from 2006 to 2010, Nesvold said.
The North American turnaround will be a blueprint for the restructuring in Europe. Ford plans to close three factories and reduce capacity in Europe by 18 percent to save as much as $500 million a year.
"Ford continues to take its medicine in Europe, while Asia Pacific and South America feel upfront costs as they position for longer-term growth," Morgan Stanley analyst Adam Jonas said.
But Europe remained unpredictable, Ford said, adding it would take more action if necessary. Earlier, Ford had forecast its 2013 loss to be on par with 2012 levels.
The estimate of a bigger 2013 loss is also affected by lower interest rates and a stronger euro. Lower interest rates increase the value of Ford's future pension liabilities.
The $2 billion loss estimate for 2013 includes about "half a billion dollars" in restructuring costs, CFO Shanks said. "We view that as an investment in the future." (Reporting by Deepa Seetharaman and Paul Lienert; Additional reporting by Laurence Frost; Editing by Jeffrey Benkoe)