Freeport-McMoRan stock down on capex cut, dividend

* Suspends annual dividend

* Cuts 2009 capital expenditure budget

* Stock falls more than 18 percent

* CEO positive about copper markets

(Recasts, adds CEO comments, stock details)

By Euan Rocha and Steve James

NEW YORK (Reuters) - Shares of Freeport-McMoRan Copper & Gold Inc (FCX.N) plummeted more than 18 percent on Wednesday after the mining giant suspended its dividend, slashed capital expenditure by more than half and lowered copper output because of the recent slump in metal prices.

The announcement came just four months after the company had raised its annual dividend while riding a wave of record prices for copper and other metals, and 21 months since taking over Phelps-Dodge -- a bigger mining rival it acquired in a bold $25.9 billion deal.

"We are doing this to respond to the fact of dropping commodity prices," Chief Executive Officer Richard Adkerson told Wall Street analysts on a conference call.

"What we have to deal with presently is a huge, dramatic change in revenue," he said, noting that copper, which was selling for around $4 per pound in July, is now below $1.60.

Adkerson said the company had contingency plans if the copper price fell below $1.50, and even as he spoke, the price in New York hovered just above that level.

Freeport's moves on capex and the dividend will position the company to take advantage of an expected global economic turnaround which would once again send metal prices soaring, Adkerson said.

"We see a long-term positive market for copper."

In a statement, Freeport, which previously projected 2008 annual copper sales of 4 billion pounds, said it will reduce copper production by about 200 million pounds in 2009 and by about 500 million pounds in 2010 from October estimates.

Freeport is reviewing its copper mining operations to identify potential further reductions in costs and plans to more than halve its 2009 capital expenditure budget to $1.1 billion from a prior estimate of $2.3 billion.

The move to suspend the annual dividend of $2 per share will save the company about $755 million on an annual basis, it said.