DETROIT (Reuters) - Ford Motor Co posted a sharply narrower fourth-quarter loss on Thursday after cutting costs and boosting margins on vehicles and said it expects a net loss for the full year 2008.

The nation's No. 3 automaker, which has struggled with declining sales and sliding market share in the United States, said it would take further cost-cutting actions on its home turf, including offering buyouts to all of its unionized work force.

Ford reported a fourth-quarter net loss of $2.75 billion, or $1.30 per share, compared with a loss of $5.63 billion, or $2.98 per share, a year earlier.

The loss from continuing operations, excluding one-time items, was 20 cents a share. On that basis, analysts expected a loss of 19 cents a share, according to Reuters Estimates.

Fourth-quarter revenue came in at $44.1 billion, up from $40.3 billion a year earlier.

"Although our automotive operations are improving on a year-over-year basis, the U.S. economy is slowing and the outlook for the auto industry remains challenging," Ford Chief Executive Alan Mulally said in a statement.

The U.S. auto market, the world's largest, has been hurt by a slowing economy, a slumping housing market and tighter credit markets that pinched less credit-worthy borrowers.

U.S. auto sales fell for the second consecutive year in 2007 and the consensus view among Wall Street analysts and high-profile investors points to a further decline this year.

LABOR COST CUTS

Ford is about to announce buyouts for all 54,000 of its factory workers represented by the United Auto Workers union, as part of a labor contract reached last year.

Analysts have hailed the contract for its potential to slash the company's labor costs by allowing it to hire new workers at half the wage rate of current employees. The pact also shifts retiree health-care obligations to a new trust fund.

Ford cut 6,500 factory jobs in North America during the third quarter, taking its total work force reduction to about 33,600 since late 2005.

In the crucial North American market, Ford posted a narrower pre-tax loss of $1.6 billion in the fourth quarter, compared with a loss of $2.7 billion a year earlier.

That improvement reflected higher pricing as the automaker pulled away from cut-rate sales to car rental companies and held back from offering consumer incentives such as zero-percent financing.

Ford's global automotive unit reported a pre-tax loss of $889 million for the quarter.

For the full year 2007, Ford's North American auto unit reported a pre-tax loss of $3.5 billion.

Ford forecast a loss in its automotive unit for the full year 2008 but said it still expects to be profitable in North America and in its auto operations in 2009.

Ford's finance arm, Ford Motor Credit, said net income dropped 33 percent to $186 million in the fourth quarter. The unit reported net income of $775 million for 2007 and said it expects about the same results in 2008.

(Reporting by Jui Chakravorty Das and David Bailey; editing by John Wallace)

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