UPDATE 3-Sulzer's H1 orders down 29%, sees no quick recovery

* Orders fall to 1.56 bln Sfr ($1.44 bln)

* Sulzer expects significantly lower order intake in 2009

* Says does not expect quick recovery in its key markets

* CEO says will do smaller buys, balance sheet strong

* Shares down 1.1 pct

(Adds comments by CEO, analyst; share price)

By Oliver Hirt

ZURICH, July 14 (Reuters) - Swiss engineering group Sulzer AG (SUN.S) posted a 29 percent drop in first-half orders as its key markets worsened, and predicted substantially lower orders for the whole of 2009.

Sulzer, which makes pumps for the oil and gas industry and surface coatings for jet engines, forecast on Tuesday "a substantially lower order intake compared to the high level of 2008" and does not expect a quick recovery in its key markets.

"For the company as a whole a recovery cannot be expected before 2011," Chief Executive Officer Ton Buechner told Reuters.

Shares opened down 1.7 percent but regained ground and were 1.1 percent lower at 62.90 Swiss francs by 0749 GMT, when the Swiss mid-cap index .SMIM was up 0.6 percent.

The stock hit 39.15 francs in March, its lowest level in nearly five years.

"As order backlog feeds through, capacity utilisation will decline and the margin should come under pressure," Vontobel analyst Fabian Haecki said in a note.

First-half orders totalled 1.56 billion Swiss francs ($1.43 billion). They fell 29 percent adjusted for currency effects and acquisitions and 31 percent in nominal terms.

Analysts polled by Reuters had expected Sulzer's orders to fall 30 percent to 1.59 billion Swiss francs. [ID:nL929409]

Meanwhile the company would continue to look for some growth with acquisitions, Buechner said. "We will do further small, service-driven acquisitions if the opportunity arises," he said. "Sulzer's balance sheet is strong and can allow us to take bigger steps even in a downturn."