* World's top alumina plant shut in pollution dispute
* Brazil plant operated at half capacity since March
* Aluminium production at risk over alumina shortage
* Price of aluminium jumps, Hydro shares fall sharply (Adds CEO quotes)By Terje Solsvik and Ole Petter SkonnordOSLO, Oct 3 (Reuters) - Norsk Hydro will haltproduction and layoff 4,700 people at the world's largestalumina refinery, Brazil's Alunorte, which has been operating athalf capacity since March due to an environmental dispute, itsaid on Wednesday.The decision to close the plant indefinitely is a majorsetback for the Norwegian metals maker, which only last monthsigned two deals with Brazilian authorities that it believedwould help it resume full production. Hydro's shares fell 12 percent on the news to a 21-monthlow, making it the worst performer in the European STOXX 600Index . The price of aluminium, the product made fromalumina, climbed 5.5 percent to its highest since June.The decision also triggered a shutdown of Hydro'sParagominas bauxite mine, which supplies Alunorte, and will leadto the imminent closure of the nearby Albras aluminium smelter,Chief Executive Svein Richard Brandtzaeg said."Thousands of people will be without jobs," Hydro ChiefExecutive Svein Richard Brandtzaeg told a conference call,adding that about 3,000 of those were employees and contractorsat Alunorte and 1,700 were workers at Paragominas.He did not give a number for how many could be laid off atthe Albras smelter.The closures will have "significant operational andfinancial consequences" Hydro said in a statement.Alunorte made 6.4 million tonnes of alumina in 2017, about10 percent of global production outside China and enough to makesome 3 million tonnes of aluminium. Its partial shutdown earlierthis year drove up market prices for alumina and aluminium.The original output cut occurred after the company admittedmaking unlicensed emissions of untreated water during heavyrains, but while Hydro said its problems have been fixed, it hasyet to convince authorities to allow a restart. The decision to halt all production was taken as therefinery's waste deposit area is close to full capacity and theongoing dispute is preventing Hydro from using a newly createdresidue facility, it said.The company declared force majeure earlier this year on somealumina deliveries from Brazil, and now plans to expand thisdeclaration, Brandtzaeg said."We will continue to work constructively with theauthorities to lift the embargo and to resume operations inorder to re-establish Alunorte as the world's leading aluminarefinery," Hydro added.Shares of Alcoa , a major producer of both alumina andaluminium, rose more than 9 percent in early U.S. trading, whileCentury Aluminium , which outsources alumina production,initially fell by 17 percent. (Editing by Dale Hudson and Edmund Blair)