WRAPUP 3-American Capital, Allied plunge on Q3 loss, dividend

* American Capital suspends dividend for rest of 2008

* Allied says may reduce dividend in 2009

* Both companies post Q3 loss

* American Capital stock falls 44 pct, Allied down 47 pct

(Adds details from American Capital's conference call, analysts' comments, updates share movement)

By Anurag Kotoky and Santosh Nadgir

BANGALORE, Nov 10 (Reuters) - Buyout firm American Capital Strategies Ltd (ACAS.O) suspended its quarterly dividend for the rest of 2008, while smaller rival Allied Capital (ALD.N) said it may reduce its 2009 dividend after the firms posted quarterly losses hurt by a depreciating investment portfolio.

Shares of American Capital, a component of the S&P 500 Index, tumbled as much as 44 percent to their life-time low while those of Allied fell 47 percent. They were the highest percentage losers on Nasdaq and the New York Stock Exchange respectively.

Bethesda, Maryland-based American Capital in a conference call with analysts said it was giving a "hard look" at making staff adjustments as a means to conserve capital.

"Do I think they are going to cut jobs? Absolutely," BMO Capital Markets analyst David Chiaverini told Reuters.

Earlier in the day, American Capital said severe disruptions in the credit markets led to the depreciation in the value of its assets by about $731 million in the quarter.

"We are in the midst of a severe recession and tremendous volatility in every financial market," said Chief Financial Officer John Erickson.

Washington-based Allied Capital may incur severance costs in the current quarter due to additional headcount reductions, Chief Operating Officer Joan Sweeney said in a conference call with analysts.

"We are acting again to reduce our costs across all areas of our firm, which will include further reductions in staff, compensation and administrative expenses over the next few months," Chief Executive William Walton said.

The company also said most of its 2008 dividend payments have been or will be made from excess 2007 taxable earnings.

Business development firms like American Capital and Allied, which usually make loans to small businesses in return of equity stakes, have seen their investment portfolio deplete and raising capital increasingly difficult amid the financial crisis.