Online recruiter Stepstone has closed down its UK operation with 135 jobs lost from its London office.

The company also announced it is to cut at least 526 jobs across Europe in a bid to reduce its cost base and move its troubled online recruitment business towards profitability.

The organisation will continue to run its operations from Norway and its business will now centre around its successful markets in Germany, Belgium and Denmark.

In a statement issued today, a spokesman said that Stepstone will attempt to grow its business in Norway, Sweden, Finland, the Netherlands and Luxembourg.

But it will cut financial support to its UK subsidiary company and look to reduce costs in other countries where the business has not performed, namely France and Italy.

StepStone employs 876 people across Europe but as a result of the plan, this will be reduced to less than 350.

Meanwhile, sources speculate that StepStone is about to be bought out by a consortium of other recruitment companies, led by Adecco.

However, director of corporate relations Bob Gregory said that the suggestion was "novel", adding: "We never comment about rumours."

A statement released today said talks to secure further funding are nearly complete and the proposals will be mooted at an Extraordinary General Meeting in the next few days.

Revenues continue to decline overall dropping from E17.1 million in Q2 to E13.4 million in Q3.

Pre-tax losses continued to decrease, from E29.9 million in Q2 to E16.7m in Q3. However the statement admitted that the current economic slump was threatening the company’s existence.

"The board recognises that with the changes that have occurred in both the financial and business environments that this rate of improvement is no longer sufficient to ensure the survival and profitability of the company," a spokesman said.

Earlier financial figures had revealed that the company needed to find more money or its cash supplies would run out at the end of this year.