* H1 pretax loss 29.8 million pounds
* No dividend this year
* Outlook uncertain for peak trading and 2009
* Compliant with banking covenants
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LONDON, Nov 27 (Reuters) - DSG International, Europe's second-largest electrical goods retailer swung to a first-half loss and suspended its dividend as it grapples with the deepening consumer downturn.
"Given the current economic conditions, the outlook is uncertain for peak trading and 2009. The group has set the business conservatively to preserve cash and earnings," it said.
DSG, whose store chains include Currys and PC World in Britain, Elkjop in the Nordic region and UniEuro in Italy, posted an underlying loss before tax of 29.8 million pounds for the 24 weeks to Oct. 18.
This compares to analysts' forecasts of a loss of 25 million pounds to 35 million pounds and a year-earlier profit before tax of 52.4 million pounds.
Group sales increased 3 percent to 3.47 billion pounds.
Sales at stores open at least a year fell 7 percent in the first-half, while gross profit margins were down 70 basis points.
DSG said trading conditions got worse as the second half progressed and cut its investment plans with capital expenditure for the current year cut by 30 million pounds to 160 million pounds.
"To preserve liquidity and to ensure the delivery of the renewal and transformation plan a dividend will not be paid in the current financial year," it said.
DSG ended the first-half with net debt of 149.5 million pounds.
"The group is compliant with the financial covenants of its banking facilities at the half-year, with 300 million pounds undrawn and available at that date," it said.
Chief Executive John Browett said the group was prioritising cash generation as well as tightly managing stock, margins and costs.
Shares in DSG, which operates 1,200 shops and online stores in 28 countries, have slumped 88 percent over the past year, hit by the sharp fall in demand for big ticket items, worries over U.S. rival Best Buy's entry into Europe next year and concerns over the withdrawal of credit insurance for suppliers.
The stock closed Wednesday at 14 pence, valuing the business at 248 million pounds -- less than 12 days sales. (Reporting by James Davey; Editing by Chris Wickham)