Euro Coal-Prices seen stable as Colombia exports offset U.S.

* Richards Bay October cargo trades at $86.75/mt

* Atlantic basin to remain in surplus

LONDON Aug 28 (Reuters) - Physical coal prices in Europe will likely to remain near current levels as improved Colombian exports are offset by slowing supplies from the United States, Barclays Capital said on Tuesday.

Coal prices have been declining for much of the first half of the year as weak demand clashed with rising exports from the United States, where coal-fired electricity generation has become unprofitable as a result of the shale gas boom in North America.

"We expect the pace of U.S. exports to slow. However, Colombian exports should be flat in H2 (second half of 2012), though they should ramp up loadings to make up for the lost exports in August," BarCap said in a research note.

"Overall, the market remains in surplus, (and) prices should remain at similar levels through the remainder of the year."

Colombian production dipped in late July and early August as a rail strike prevented coal from inland mines from being transported to export terminals along the coast.

As a result of the strike, the Atlantic basin saw a supply squeeze but following the end of the dispute 10 days ago, the Atlantic is expected to return into surplus by the end of this week, analysts say.

Traders said European coal prices would bottom out soon as further price drops would knock out some production.

European coal trading on Tuesday was thin following the August bank holiday weekend in Britain.

A South African Richards Bay cargo for delivery in October exchanged hands at $86.75 a tonne on the GLOBALcoal trading platform, and a September cargo was bid at $83 a tonne.

European DES ARA shipments for delivery in October were offered at $92.25 and November was bid at $91.50 per tonne.

(Reporting by Henning Gloystein; editing by Jason Neely)