By Bhaswati Mukhopadhyay

BANGALORE (Reuters) - Continental Airlines Inc (CAL.N: Quote, Profile, Research) posted a wider quarterly net loss, hurt mainly by a non-cash charge, and said rising fuel prices, competition, labor and other costs may affect its financial condition in 2008.

Continental shares fell more than 2 percent to $29.24 in afternoon trading on the New York Stock Exchange.

The fourth-largest U.S. carrier posted a fourth-quarter net loss of $32 million, or 33 cents a share, compared with a loss of $26 million, or 29 cents a share, a year ago.

The airline said it recorded a special non-cash charge of $104 million in its fourth quarter for the increase in its deferred tax asset valuation allowance.

News of the quarterly loss comes as the fledgling recovery of the U.S. airline industry is threatened by record oil prices and a slump in the economy.

The prospect of a new downturn has spurred some carriers to consider mergers, with the aim of cutting costs and reducing capacity.

Continental, based in Houston, has said it prefers to remain independent, but sees consolidation in the industry adversely affecting its competitive position.

The declining value of the dollar versus foreign currencies could also hit the company as international travel costs would go up for U.S. residents, Continental said in its annual report with the U.S. Securities and Exchange Commission.