LONDON (Reuters) - Menswear chain Moss Bros said it continued to feel the impact of slowing consumer spending and that it expects the remainder of the year to be challenging after first half losses widened.

The retailer, which sells and hires out suits, reported a pretax loss of 1.6 million pounds for the six months to July 26, compared with a loss of 0.7 million pounds at the same stage last year, on revenue 2.9 percent lower at 61.1 million pounds.

Moss Bros's gross margin rose by 40 basis points during the period and like-for-like sales from its hire division jumped 2.5 but no interim dividend will be paid, said the retailer.

Group-wide like-for-like sales fell 2.6 percent in the half year but were flat in the first eight weeks of its second half and the chain said it was confident it would meet market expectations for the full year, despite the "challenging times" ahead.

"The outlook for the rest of the year is in line with expectations. This is predicated on the fiscal state of the economy remaining broadly in line with the current situation and not materially worsening," Chief Executive Philip Mountford said in a statement.

A poll of analysts by Reuters Estimates forecast Moss Bros would make a full year pretax loss of 1 million pounds.

Earlier this year Icelandic investment group Baugur abandoned plans for a 42-pence-a-share bid for the menswear chain, after clothing and furniture retailer Laura Ashley raised its stake to 10 percent.

The formal wear specialist, in which Baugur holds a 29 percent stake, has suffered as indebted shoppers curb spending amid rising food, fuel and mortgage costs and a cooling housing market. However, the group said it would focus on fashionable formal wear, Far East sourcing, IT investment and store refurbishments to help turn things around.

Shares in Moss Bros, which have shed 46 percent since the turn of the year, closed at 25 pence on Wednesday, valuing the group at around 23.5 million pounds.

The stock has underperformed the FTSE All Share general retailers index .FTASX5370 by 15 percent since the start of 2008.

(Reporting by Rhys Jones; Editing by David Cowell)