UPDATE 1-AmEx sees signs of stabilization, recovery in 2010

* CEO sees charge-offs rising at slower pace

* CEO sees economic recovery in second half of 2010

* Shares fall 1.55 percent to $22.28 in afternoon trading

NEW YORK, July 8 (Reuters) - American Express Co (AXP.N) sees signs of stabilization in the contraction of spending, but not green shoots, and estimated an economic recovery in the second half of 2010, its chief executive said.

Card bills fell 10 percent in the fourth quarter of 2008, and accelerated its decline to 16 percent in the first three months of 2009, putting a dent in the company's earnings.

"We are off of double digit declines, but we have not seen any increases. But to have several months of stability in billings I think is encouraging, but I wouldn't characterize it as a recovery," Chief Executive Kenneth Chenault said on Wednesday in an interview on CNBC.

"If we can go for another two or three months and start to see some build, then that is going to be pretty encouraging," he added.

American Express' CEO said charge-offs -- debts the company does not expect to be repaid -- were still "going up, but at a slower rate". The firm's charge-off rate rose to 8.5 percent in the first quarter and is expected to climb to between 10.5 percent or 11 percent in the second quarter.

He added a law -- due to enter in effect in February 2010 -- that limits credit card fees and interest rates, would make it more difficult to have access to credit, hurting the possibility of an economic recovery.

"I would hope that we would start to see some improvement (of the economy) maybe some time in the second half of 2010, but again, that depends on jobs that are being created, consumer confidence," Chenault said.

Chenault said American Express was still investing, but less than in 2008, and declined to give any figures. He also said the company could be interested in buying high-end, co-branded card products if they become available.

American Express was the fastest growing credit card company during the credit boom of 2003-07, but paid a heavy price when the bubble burst as mounting credit losses sent its earnings spiraling lower in late 2008 and early 2009.

The U.S. largest credit card company by sales has been slashing lending, trimming costs, and divesting to shore up its balance sheet.

Shares fell 1.2 percent to $22.36 in afternoon trading on the New York Stock Exchange. (Reporting by Juan Lagorio; Editing by Richard Chang, Bernard Orr)