Tens of thousands of European bankers are losing their jobs in a deep trading slump that has been compounded by regulatory curbs on excessive risk -- and many more will be out of work before Christmas.

As Switzerland's Credit Suisse, which weathered the financial crisis better than most peers, announced 2,000 job cuts on Thursday, some financial recruiters forecast thousands more job losses by next March.

The eye of the storm has passed. But there's still the back of the storm, said Jason Kennedy, who runs recruitment agency Kennedy Associates.

Some people think the last quarter (of this year) will save them. But the way the market is, I don't believe anything is going to change. The U.S. is getting deeper into trouble, Europe is in the doldrums -- there's no good news out there.

Changes in pay structures -- with banks ramping up fixed salaries to compensate for pressure to cut bonuses -- have given them less flexibility when hard times bite. The regulatory crackdown is also prompting banks to streamline and exit businesses.

After grim second quarter trading, the current quarter is being warily watched for signs of recovery, and recent guidance has not been promising.

Based on current performances, I'd expect more cuts before Christmas, said Jonathan Nicholson, managing director at London-based recruitment firm Astbury Marsden.

Banks have always managed out the bottom 5 percent. That bottom 5 percent is now a bottom 10 percent if not a bottom 15 percent in certain functions -- and it's happening three, four maybe even five months earlier than normally. That is an indicator of just how challenging performances have been.

TRADING TROUBLES

Credit Suisse said it was axing 2,000 jobs, or four percent of staff, after a second quarter crash in bond trading. Rivals have also seen activity slump as the euro zone debt crisis prompts investors to shy away from the market.

The boom in fixed income sales and trading in the months following the financial crisis, which prompted many to aggressively hire to ride the wave, has been reversed. And the outlook is grim.

We have to recognize the likelihood that the current headwinds in the economic and market environment may be more persistent than we would have hoped, said Credit Suisse CEO Brady Dougan. We may also continue to see lower levels of client activity and a volatile trading environment.

Banking behemoth HSBC is also expected to cut thousands of jobs as part of a $3.5 billion cost cutting plan over the next few years. Switzerland's UBS is planning

to axe thousands to reach a 2 billion franc cost reduction plan.

Barclays, Goldman Sachs, Royal Bank of Scotland and others have also cut investment bank jobs.

The star rainmakers and investment bankers will be joined on the street by thousands from the retail divisions.

British retail bank Lloyds Banking Group plans to slash another 15,000 jobs, while HSBC, Intesa Sanpaolo and Unicredit are also taking an axe to retail.

The trading slump has been most marked in banks' fixed income, currencies and commodities (FICC) units, which account for about half of investment bank income.

Credit Suisse's FICC revenue plunged 76 percent to 595 million francs quarter-to-quarter and came in 59 percent below last year's level.

Wall Street's top banks showed an average fall of 27 percent from the first quarter -- led by a 63 percent slump by Goldman Sachs -- and Deutsche Bank and UBS saw a 36-37 percent fall.

Morale is very, very low, says Kennedy. Morale will rise when the beating stops. But the beating hasn't stopped. I think we'll get another 18 months of this.

It's like a forest fire. Once it takes hold, it burns three quarters of the forest down and then new shoots start coming up the following year. It will be fun in about 18 months' time.

(Editing by Andrew Callus)