Wary London businesses freeze recruitment

A homeless man sits in the rain as commuters make their way to work across London Bridge in London June 11, 2012.

LONDON (Reuters) - London businesses are less gloomy about the economy than six months ago but are cutting back on hiring staff because of the crisis in the euro zone, a survey showed on Tuesday.

The number of employers freezing their recruitment has more than doubled to 51 percent over the past six months, the CBI/KPMG London Business Survey showed.

London will host the Olympics next month and the government is hoping that staging the world's biggest sporting event will help to revive an economy stuck in recession.

"In this milestone year for London, it's great to see that the capital's firms are more optimistic than six months ago, but the shadow cast by the euro zone crisis continues to hang over businesses and the economy," said Sara Parker, CBI London region director.

"Increased euro zone anxiety means employers are reluctant to invest, take on new people or expand their businesses," she added.

Adding to concerns around the Olympics, London businesses rated transport as the second major weakness of doing business in the capital, behind overall operating costs.

There are fears that London's transport system and road network will grind to a halt during the July 27-August 12 Olympics because of the sheer number of people trying to get to the Games.

In the survey, 41 percent of respondents said they felt more optimistic about the prospects for the economy over the next six months, up from only 13 percent in a previous survey last December.

The CBI/KPMG study polled 264 companies in London. The two groups are expected to release a further report in the coming weeks looking specifically at expectations around the Olympics.

(Reporting by Keith Weir; editing by Ron Askew)