Industry moles have told Morgan Stanley analyst Rebecca Runkle enough to convince her that Apple will launch the eagerly awaited iPhone in the first half of 2007 after an announcement at Macworld Expo early next year.

According to an Associated Press report citing a recently issued investor report written by Runkle, the iPhone will cost $599 for a 4GB model and $649 for a 8GB version. The handset, she said, will be wider than an iPod Nano but narrower than the 5G iPod, but it will have a large, 3.5in display. Like the Nano, it will have a metal casing offered in a variety of colours.

While the capacities match those claimed by Digg.com founder Kevin Rose earlier this month, Runkle's prices are much higher than Rose's - $249 and $449 - though the latter's could be how much the handsets will cost when bought through a carrier.

Rose said the handset was small, which matches Runkle's size forecast. ®