UPDATE 1-UPS cuts Q1 EPS view, cites worsening U.S. economy

(Recasts lead, adds details of EPS, company comment, background on UPS, FedEx, updates stock action)

CHICAGO, April 8 (Reuters) - Package delivery company United Parcel Service Inc (UPS.N: Quote, Profile, Research) lowered its quarterly earnings outlook on Tuesday, citing deteriorating U.S. economic conditions and high fuel costs, sending its shares down 4 percent.

The announcement came less than three weeks after its main rival, FedEx Corp (FDX.N: Quote, Profile, Research), reported a 7 percent decrease in quarterly earnings due to slowing U.S. economic growth and high fuel costs.

Both Atlanta-based UPS and Memphis-based FedEx are considered bellwethers of U.S. economic activity.

UPS said it now expects earnings in a range from 86 cents or 87 cents per share, compared with its previous range of 94 cents to 98 cents.

Analysts had expected earnings per share of 92 cents, according to Reuters Estimates.

UPS said in March that package volumes were down in February, with Chief Financial Officer Kurt Kuehn warning that "if these trends continue through March, our earnings guidance for the first quarter will be difficult to achieve."

The company said in a statement on Tuesday that the "U.S. economy has continued to weaken, causing a reduction in domestic package volume and a shift away from premium products. Significantly increased fuel costs in the quarter also contributed to the lower-than-expected results."

UPS shares fell to $70.70 in after-hours trading from its close of $73.31 on the New York Stock Exchange. (Reporting by Nick Carey and Alexandria Sage; editing by Jeffrey Benkoe)