UPDATE 1-Russia's services sector contracts sharply in Nov

(Adds Labour Ministry data, analyst, background)

MOSCOW, Dec 3 (Reuters) - Russia's service sector contracted for the second month in a row in November, knocking the VTB Bank Europe services purchasing managers index (PMI) to the lowest level in its seven year history, data showed on Wednesday.

The headline figure plunged to 37.2 in November from 47.4 the previous month, moving far below the 50 mark that separates growth from contraction. The October reading marked the first contraction since the index was launched in the autumn of 2001.

The indexes for business activity, new business and outstanding orders all fell to record lows. The breakdown suggested new orders in financial, transport and hospitality sectors fell the most.

The unadjusted business expectations index fell to 48.6, showing that companies expected things to get worse over the next 12 months for the first time in the survey's history.

The data chimed in with recent indicators that Russia is feeling the pinch from the global economic slowdown.

Russia's Labour Ministry said 26,625 people lost their jobs since the start of October, although some of them have found new work. The ministry said 186 organisations have moved 81,195 people to part-time work schedule or given them mandatory leave.

As of Nov. 26, 5,233 companies were planning layoffs, which will take place in machine building, metals, chemicals, road construction and freight sectors, ministry data showed.

Earlier this week the Russian manufacturing sector showed a sharper downturn in November than during the 1998 financial crisis, with the VTB Bank Europe PMI falling to the lowest in its 11-year history on Monday.

"The situation in the services sector might be deteriorating even faster than in manufacturing sector, which could pose considerable downside risks to broader real GDP growth," said Unicredit analyst Vladimir Osakovsky.

Some analysts do not regard VTB's PMIs as strong leading indicators because in the past they tended to lag statistical data. November industry output data from statistics office is expected in mid-December.

The Economy Ministry forecasts GDP growth of 3.0-3.5 percent in 2009, if the price for Urals crude , Russia's main export blend of oil, averages $50 per barrel.

The ministry is now working on a new three-year economic forecast which will serve as a guidance for the budget revision early next year and the government's anti-crisis plan to be published on Dec. 20.

Vedomosti daily, quoting the draft forecast obtained by the newspaper, reported that Russia's industry output is expected to fall by 2.4 percent in 2009 and capital investment by 5 percent.

The Economy Ministry said the forecast had not yet officially been signed by minister Elvira Nabiullina and the numbers were still subject to change. It said the final version should go to the government by the end of the week. -- For a table of services PMI data see [ID:nL2466441]. (Reporting by Gleb Bryanski; editing by David Stamp)