UPDATE 1-China Steel cuts Dec prices, but sees better '10

* First price cut after three increases since July

* Minor impact seen as company still meeting pft expectation

* Company says expects a better 2010

* Shares up 0.5 pct before announcement, beating main index (Adds comments, details)

By Faith Hung and Lin Miao-jung

TAIPEI, Oct 21 (Reuters) - China Steel, Taiwan’s top steel maker, will slash its domestic product prices by 4.5 percent in December from the October-November tag, but it expects a better outlook for 2010 as global economy recovers from a downturn.

The cut, China Steel's 2002.TW first one after three price rises since July, followed bigger Chinese rivals and would not extend into next year.

“The price slash indicated a bottoming-out, rather than the beginning of trending downward,” T.Y. Huang, a company vice president, told Reuters by phone.

Some analysts agreed.

“The cut was a one-time thing since the global steel industry will be picking up at a gradual pace next year. We expect China Steel to raise prices in 2010,” said an analyst at a local fund house.

China Steel would still be able to post a net profit of T$10 billion ($309 million) this year, which had expected by the market, said the analyst, who asked not to be identified as she was not authorised to speak to media.

China's Baoshan Iron and Steel Co (Baosteel) 600019.SS had cut prices for its major steel products by 9-13 percent for November sales versus October, industry consultancy Umetal said earlier this month. [ID:nSHA236354]

China Steel used to adjust prices every three months in the previous year or so, but started announcing price changes on a flexible basis to better reflect global markets.

News of the price adjustment came just before the stock market closed. Shares of China Steel ended up 0.5 percent, beating the broader market's .TWII 0.67 percent slide.

(Editing by Ken Wills)