UPDATE 2-Nyrstar Q3 zinc output slips, eyes more cuts

* Zinc production falls in Q3

* Eyes further production cuts in 2009

* Cuts net debt during Q3 by over 110 mln euros to 14 mln

* Shares down 0.9 pct, outperforming sector index

* No short-term plans for share buyback

(Adds CEO comments, share price, analyst comment)

By Antonia van de Velde

BRUSSELS, Nov 18 (Reuters) - Belgium's Nyrstar (NYR.BR), the world's biggest producer of zinc, said on Tuesday zinc output fell in the third quarter and warned of further production cuts in 2009 amid a gloomy economic outlook.

"If the present economic environment persists, further production cuts will be made in 2009. All options to improve performance are on the table," Nyrstar Chief Executive Paul Fowler said in a statement.

Nyrstar shares were down 0.9 percent at 2.54 euros at 1210 GMT after opening three percent higher, against a 3.1 percent fall in the DJ Stoxx European basic resources index .SXPP.

"Given the good management of the difficult market environment... Nyrstar should end the year in a (positive) net cash position, which gives it room for manoeuvre to pass through the crisis. This is probably supporting the share price," Bank Degroof analyst Bernard Hanssens said.

The group said net debt declined by over 110 million euros to 14 million euros in the third quarter.

"Nyrstar also benefited from treatment charge settlements following final 2008 contract negotiations. This is better than assumed," Hanssens said.

Analysts had previously expected the group to launch a share buyback scheme as a potential positive trigger for the shares, which have fallen by more than 85 percent from their flotation price of 20 euros, but the company has decided against such a move in the short term, given the bleak economic outlook.

"We will look at these things again, but in a period of unprecedented volatility it is pretty hard to make a case for a share buyback," Fowler told a news conference.

Hanssens agreed that, given the deteriorating economic climate, it was better for the group to keep the cash and maintain flexibility during any slowdown.