Siemens is considering cutting another 4,000 jobs at its struggling fixed line telephone business, ICN, a company spokeswoman said.

That is more than double the number of jobs Siemens said it might cut at ICN just a week ago.

A spokeswoman for ICN said 4,000 was the figure "currently being used in discussions" but added that "no decisions have been taken".

Job losses are becoming an increasingly politically sensitive issue ahead of Germany's general election next month.

Flat market

Giant electronics and engineering group Siemens returned to profit in the first half of this year.

But it has warned that orders were down and that market conditions would remain "difficult".

Siemens is in the midst of cutting about 17,000 jobs at ICN to reduce costs.

Last week, Siemens said it might increase layoffs at ICN by another 1,300.

Telecoms unit ICN is struggling with lack of demand as major phone firms scale back orders to focus on cutting the huge debts they built up to buy third generation mobile licences.

Profits gloom

Last month, Siemens predicted a drop in earnings during July, August and September.

Siemens made net profits of 725m euros ($719m; �458m) in the three months to 30 June, reversing a loss of 705m euros in the same period of last year.

The group predicted a 15% fall this year in demand for the building of new mobile phone networks and a depressed market next year.

One analyst said a tougher job cuts target at Siemens suggested the firm's forecast of a global telecoms market of 42bn euros, albeit a flat market till 2005, had been over-optimistic.

"Basically, they're admitting the market will fall," said the analyst who did not wish to be named.

Spotlight on jobs

The problem of how to restore German's limp economy to its role as Europe's powerhouse has taken centre-stage in the country's election campaign.

Social Democrat Chancellor Gerhard Schroeder is battling to hang onto power in a tight race with his conservative opponent Edmund Stoiber.

News that it may widen its job cuts does not appear to have hurt Siemens' share price.

The shares rallied from earlier falls to trade up 49 cents at 51.95 euros just before midday (1154 GMT).

The blue chip Dax index was 62 points higher at 3,891 points.