* Q2 adj EBIT down 6 pct at 307 mln euros vs fcast 297 mln
* Sales down 3.8 pct at 15.34 bln euros vs fcast 15.49 bln
* Expects no significant change in earnings trend in H2
* Metro foregoes FY forecast
* Metro shares down about 1 percent
(Adds credit market reaction)
By Eva Kuehnen
DUESSELDORF, Aug 3 (Reuters) - Germany's Metro, the world's fourth-largest retailer, said on Monday that it expected sales to fall further in the coming months, mainly due to rising unemployment.
"In western Europe we see possible signs of stabilisation. However, talking today about green shoots would not be prudent," Chief Executive Eckhard Cordes said after Metro posted falling second-quarter sales and profits.
"Clear signs for a fast economic upswing after the severe downfall are so far not discernible ... We expect that retail sales will further decline in the coming months," Metro said.
Metro's second-quarter adjusted earnings before interest and tax (EBIT) fell 6.1 percent to 307 million euros ($433 million), above the average estimate of 297 million in a Reuters poll of analysts, while sales fell 3.8 percent to 15.34 billion euros, below the poll average of 15.49 billion.
Retailers across the world are struggling in the economic downturn as consumer spending has dropped due to rising unemployment and concern over the global economic crisis.
German retail sales unexpectedly fell 1.6 percent year-on-year in June, denting hopes that consumer spending could help support Europe's largest economy, though jobless numbers unexpectedly fell in July.
Carrefour, Europe's No.1 retailer, announced in June its third profit warning in 12 months, underscoring a tough year ahead for the industry. Its second-quarter sales fell 1.2 percent.
Metro shares were down 0.8 percent at 40.30 euros at 1325 GMT, having been as low as 39.42 euros earlier in the day and underperforming a 0.3 percent rise in the DJ Stoxx European retail index.
"The figures met market expectations. Nevertheless, the retail environment for the retailers remains challenging, as we see a weak consumer climate in all European countries," said UniCredit analyst Volker Bosse, who confirmed his "sell" rating.
In the credit market, five-year credit default swaps on Metro narrowed by 7.5 basis points to around 131.50 basis points, according to data from Markit.
RBC Capital Markits said in a note that Metro's net debt increased substantially from the year-end figure -- which was 4.6 billion euros -- to 8.4 billion euros, but this was a usual seasonal effect for the company, and the increase was only 0.1 billion euros from June 2008.
"The credit market is in a mood right now that this slight miss is not going to have an impact on price," said Roger Appleyard, an analyst at RBC. "Their cash flow is fine; the liquidity position is fine; they are making a decent profit."
"As long as they are ticking the boxes, the CDS could tighten a little bit, in line with the market," he said.
Metro said rising unemployment could further burden the retail business and it did not expect its sales and earnings trends to change significantly in the second half of the year.
It said adjusted operating earnings were not expected to fall by 20 percent in the full year as they did in the first half, pointing to easing pressure from currency exchange rates and from prior year comparable figures.
Metro, which is more exposed to eastern European markets than other retailers, suffered particularly from weakening exchange rates against the euro in Russia and Poland.
Metro trades at a premium to Carrefour and Britain's Tesco because its Cash & Carry and its consumer electronic operations are more cyclical than other retailers' businesses and would be more in demand when recovery kicks in, analysts said. ($1=.7085 Euro) (Additional reporting Jane Baird in London; editing by David Cowell and Karen Foster)