UPDATE 4-Pirelli to cut 350 mln euros under new plan

* Real estate unit in 400 million euro capital hike

* Part of 2009-2011 business plan for group

* No dividend this year, could resume next year

* No interest in bidding for Continental AG

(Recasts throughout, adds details, analyst comment)

By Gilles Castonguay and Stefano Rebaudo

MILAN, Feb 11 (Reuters) - Buffeted by the global crisis, Pirelli & C SpA aims to make its tyre and real estate businesses leaner by slashing at least 350 million euros ($387.8 million) in costs under a 2009-2011 plan to cut debt.

The holding company does not plan to pay a dividend this year, and it is preparing a capital hike of up to 400 million euros for its real estate business, Pirelli & C Real Estate SpA .

Pirelli has already been cutting jobs. Pirelli RE will have nearly 40 percent fewer staff and Pirelli Tyre 15 percent less.

At a presentation of the plan to analysts and investors on Wednesday, Chairman Marco Tronchetti Provera said Pirelli had decided against a dividend this year but could hand one out next year.

Pirelli's dividend yield is about 6.6 percent, in line with the European tyre sector.

It will subscribe to the capital increase for a quota equal to its 55.3 percent stake in the business. It will do this by converting part the debt the business owes it into equity.

The operation should be done in the first half of the year.

Tronchetti denied plans to delist the Pirelli RE. "We don't want a squeeze out (of minority shareholders)."

He also denied any interest in bidding for the tyre business of German rival Continental AG. "We are looking at our future on a stand-alone basis."

A source close to the issue told Reuters last week that banks had suggested to Pirelli that it buy the business.

Pirelli RE shares were down 7.08 percent at 3.74 euros as the DJ Stoxx real estate index was off 0.93 percent. The holding company was down 2.27 percent at 0.2364 euro.

TOO AGGRESSIVE

The 2009-2011 plan is an extension of a restructuring started last year to cut costs, improve efficiency, and pay off debt.

Among its targets, Pirelli is aiming for a group margin for earnings before interest and tax (EBIT) of 8 percent in 2011, up from 4.5 percent to 5 percent this year.

Pirelli plans to cut its net debt to less than 800 million euros by 2011 from about 1.0 billion euros this year.

As for Pirelli Tyre, the group's biggest business, it wants to raise the EBIT margin to as much as 8.5 percent.

In addition to staff and manufacturing rationalisations in Europe, the tyre business will renegotiate deals on raw materials to take advantage of falling prices.

Analysts like Marco Cristofori at Cheuvreux said the targets were too aggressive. Pirelli's two core businesses -- tyre and real estate -- were vulnerable to the crisis, which had yet to show signs of recovery, especially in the car market.

Among its other businesses, Pirelli is keen to develop its particulate filters for cars and trucks, taking advantage of the push for less polluting vehicles.

Despite the capital increase plans, Tronchetti said Pirelli had enough cash to run its businesses. If it was in need of any, it could sell its 5 percent stake in Alcatel Submarine, its 1.3 percent in Telecom Italia, and 34.5 percent in U.S. company CY Optics, he said.

For 2008, it reported preliminary earnings before interest, tax, depreciation and amortisation (EBITDA) of 397 million euros before restructuring costs, against 573.6 million in 2007.

Revenues were 4.65 billion euros, down 0.5 percent. (Writing by Ian Simpson; Editing by Simon Jessop and Andrew Macdonald)