* NZ businesses a shade more negative on own outlook
* Headline business confidence improves in March
* Analysts say data backs case for lower interest rates (Recasts with details)
WELLINGTON, March 31 (Reuters) - A key measure of New Zealand business confidence held near record low levels in March, a survey showed on Tuesday, backing the view the central bank will lower borrowing costs further.
A net 21.2 percent of companies expect their own business conditions to deteriorate in the next 12 months, the National Bank of New Zealand said, compared with a pessimism level in February of 20.1 percent and nearing a record low of 21.5 percent hit in December.
The monthly survey also showed investment intentions had worsened, profits were expected to remain under pressure and exports were struggling.
"The survey shows no sign of traction from efforts to stimulate the economy so far and the RBNZ may have to do more work yet," said Goldman Sachs JBWere economist Shamubeel Eaqub.
The New Zealand dollar held steady around $0.5660/70, while bank bills <0#NBB:> were firm on the back of weak equity markets.
The Reserve Bank of New Zealand has cut interest rates to a record low 3 percent to stimulate an economy in recession since the start of 2008.
RBNZ Governor Alan Bollard has signalled that the easing cycle was near an end, saying there was not much room for further rate cuts. [ID:nWEL428853]
His comments lead to a steep selloff in the swaps market, which in turn saw the five-year government bond yield soar 80 basis points in just two days last week.
Analysts say weak economic data backs the case for a further reduction in rates. A rate cut could also reduce pressure on bonds yields.
All but one of the 15 analysts polled by Reuters expect the central bank to cut rates by at least 25 basis points at its April 30 review and most predict rates will fall further to 2.5 percent by mid-year. [NZ/POLL}
Data last week showed the New Zealand economy contracted by 0.9 percent in the last three months of 2008, its biggest decline in more than 16 years, to be 1.9 percent smaller than a year ago.
The National Bank survey showed a slight improvement in the headline index, with 39.3 percent of respondents expecting the economy to worsen over the next 12 months, from a net 41.2 percent in the previous month.
"The real message is that while conditions remain tough, at least they're not getting any worse," said ANZ-National chief economist Cameron Bagrie.
"We continue to expect the RBNZ to lower the official cash rate further, but ultimately look for the currency to act as the economy's main release valve."
For an associated table click on [ID:nWEL454019] (Reporting by Mantik Kusjanto; Writing by Kazunori Takada; Editing by Neil Fullick)