Prudential cuts aluminum industry

(Reuters) - Prudential cut its rating on the aluminum industry to "unfavorable" from "favorable," and said its increased estimates for 2007 year-end aluminum inventories by 1 million metric tons.

The brokerage also downgraded aluminum producers Alcoa Inc. and Alcan Inc. on higher costs.

Prudential said it raised its estimates for Chinese aluminum output and use in 2007, but cut that for U.S. use.

Alcoa was cut to "neutral weight" from "overweight" and Alcan to "underweight" from "overweight." Prudential cut its earnings estimates on the companies on higher costs from the appreciation in the euro and on certain costs not falling in proportion to the drop in oil prices.