* Q2 net profit $339 mln vs $470 mln forecast
* Sees aluminium demand, prices continuing to rise
* HK shares down 33 pct this year, underperform index
HONG KONG, Aug 29 (Reuters) - Russia's United Company RUSAL Plc , the world's top aluminium producer, on Monday reported a sharper than expected 70 percent drop in net profit in the second quarter on non-cash items and as cost inflation offset higher prices and output.
RUSAL , which competes with U.S. aluminium maker Alcoa Inc , said it expected demand for aluminium to continue to strengthen on increased penetration in consumer markets as well as further price support based on cost inflation, including raw materials, power and labour.
The company forecast London Metal Exchange aluminium prices would trade between $2,500-$2,600 per tonne for the rest of 2011.
LME aluminium rose 0.27 percent on Friday to $2,380 per tonne.
RUSAL posted a net profit of $339 million for the three months ended June, compared with an average forecast of $470 million from 8 analysts polled by Reuters
That compared with profit of $1.12 billion for the same period a year earlier, it said in a statement.
A firmer rouble, the Russian currency, has been pressuring Rusal's margins and bottom line as its aluminium exports are typically denominated in U.S. dollars.
The net included non-cash items, such the revaluation of its share in the profit from Russian miner Norilsk Nickel and the re-evaluation of its energy supply contracts.
Shares of RUSAL have lost 33 percent in Hong Kong so far this year against a 15 percent drop in the benchmark Hang Seng Index .
Two RUSAL partners planned to sell their shares, according to a media report, which analysts said could put more pressure on the company to pay dividends in the second half.
RUSAL said restrictions under debt restructuring agreements limited its ability to pay dividends and therefore none were declared in the first half of 2011.
The company said on Friday it had received an offer from Norilsk to buy back 15 percent of its stock for $8.75 billion.
Analysts said last week that they expect RUSAL, which has a 25 percent stake in Norilsk, to reject the offer.
This is Norilsk's third attempt to repurchase the shares and resolve a long-running dispute between rival oligarchs Vladimir Potanin, whose Interros investment company holds about 30 percent of Norilsk, and Oleg Deripaska, who controls RUSAL. 486 (Reporting by Alison Leung; Editing by Jonathan Hopfner)