UPDATE 6-T.Italia eyes asset sales of nearly $4 bln, cuts jobs

* To shed non-core assets worth nearly $4 bln

* To cut further 5 percent of its workforce

* Still intends to grow in Brazil, keep fixed-line network

* Reiterates no plans for capital increase

(Adds comments on Telefonica, updates shares)

By Georgina Prodhan and Deepa Babington

LONDON/ROME, Dec 3 (Reuters) - Debt-laden Telecom Italia, Europe's fifth-biggest telecoms provider, will shed assets worth nearly $4 billion and cut another 5 percent of its workforce in a bid to slash borrowings and costs amid a weak economy.

The company dismissed reports it could sell its fixed-line network or Brazil unit -- its growth engine in recent years -- and plans to chip away at costs and investments to pare its 37 billion euros ($47 billion) of debts.

Telecom Italia (TLIT.MI) said 2009 revenue would be in line with 2008 -- lower than the 1 to 2 percent growth seen under an earlier plan -- but raised its forecast for revenue growth over the three-year period to above 2 percent annually.

It also confirmed its 2008 forecasts and said it had seen signs of improvement in the company's operations over the past six months that are expected to carry over into the next year.

Analysts welcomed the stable near-term outlook and bullish long-term forecasts, but fretted they may be unduly optimistic.

"We do not expect investors to believe in these aggressive targets, but estimates look likely to be increased rather than cut for the first time ever after a Telecom Italia investor day," Deutsche Bank analysts told clients, while JP Morgan analysts said the 2011 targets appeared to be a "stretch".

Other analysts were disappointed that CEO Franco Bernabe -- who has championed a belt-tightening strategy since taking the reins a year ago -- declined to discuss whether the company would cut its dividend further.

Telecom shares, which have bounced from an 11-year low of 0.715 euros set in October, were down 2.5 percent at 1.02 euros by 1311 GMT, underperforming a 0.6 percent-stronger European telecoms index .SXKP.

Telecom Italia's five-year credit default swaps tightened by nearly 20 basis points to 422.50 basis points, according to Markit data.