MILAN, March 5 (Reuters) - Italian eyewear production has fallen more than 10 percent during the first quarter, following a decline which started with weakening demand last year, the head of industry body Anfao said on Thursday.

Production in Italy, a world leader in the industry, totalled 2.597 billion euros ($3.27 billion) last year, down 6.4 percent from 2007, said Vittorio Tabacchi, head of the Italian Association of Optical Items Manufacturers (Anfao).

He said the fourth quarter had weighed heavily on the trend.

"We do not have data for the first quarter yet," Tabacchi told a news conference, adding that the expectation is for it to be low, around the fourth quarter level, with a double-digit decline.

Exports of frames, sunglasses and lenses -- which account for about 85 percent of production -- fell 4.7 percent in 2008, he said.

Exports of sunglasses and frames to the United States, the main export market, fell 20.5 percent. Those to European countries also fell, with sunglasses suffering the most from the downturn.

"Both the fall in exports ... and a downturn in the domestic market caused production to slow down, immediately leading to a reduction in the number of companies and people employed," said Tabacchi.

Some small companies have closed and medium- and big-sized players have had to close production facilities temporarily, reduce working hours and lay off employees, he said.

Italy's Luxottica (LUX.MI) and Safilo (SFLG.MI), among the industry's top players, have both been hit by the slowdown.

Tabacchi is chairman of Safilo, which saw its net profit fall 71.3 percent last year as demand for its high-end glasses and sunglasses slowed and high productions costs in Italy took their toll.

Luxottica, whose brands include Prada and Ray-Ban, has forecast this year to be a challenge and expects a 16 percent fall in its net profit from 2008. ($1=.7946 Euro)

(Editing by Sharon Lindores)