UPDATE 1-Pearson launches new cost-cutting drive, may sell K12 business

(Adds details, quote)

LONDON, May 5 (Reuters) - Pearson, the global education company battling a downturn in its biggest markets, said it would cut more costs and consider selling its U.S. school courseware business in the latest attempt to restructure.

Pearson, which has issued five profit warnings in four years after students in the United States started renting rather than buying text books, said it would cut its cost base by 300 million pounds ($388 million) a year by the end of 2019.

Employing 35,000 people, Pearson provides everything from textbooks to school testing, college courses and online degrees, with Britain, the United States, South Africa, Brazil and China its most important markets.

It has been hit in recent years by an improving U.S. economy, which encourages people to go into work rather than higher education, and by the swift shift to digital services which has hammered its revenue stream.

It has cut more than 650 million pounds of cost in two restructuring programmes over the last four years and said on Friday it had identified further areas to make cuts, in general and administrative expenses and in North America.

It will also conduct a strategic review of its U.S. K12 courseware publishing business, which it said had lagged other sectors in moving to digital services. It said the division required high levels of investment and was facing a challenging market environment.

Pearson, which has lost a quarter of its market value in the last nine months, said first-quarter trading had been in line with guidance and it reiterated its full-year targets.

Sales in the first three months were up 6 percent in underlying terms, helped by a stronger performance from its North American higher education courseware unit.

But it said market pressures on the business were still expected to impact gross sales, primarily in the second half.

"The measures we are announcing today build on the work completed last year and will allow us to further simplify our portfolio, reduce costs and accelerate our digital transformation," Chief Executive John Fallon said.

($1 = 0.7737 pounds) (Reporting by Kate Holton, Editing by Paul Sandle)