By Daniel Trotta

UNITED NATIONS, Feb 15 (Reuters) - U.N. Secretary-General Ban Ki-moon warned against sanctions targeting the illegal minerals trade in the Democratic Republic of Congo, saying they would do little good and could harm the country's first democratically elected government.

Ban, in a report to the U.N. Security Council released on Thursday, was responding to a panel of U.N. experts that urged action to stop the plundering of minerals, including gold and diamonds from one of world's poorest countries.

The Security Council on Thursday also extended by two months the mandate for the 17,000-strong U.N. peacekeeping mission in the former Belgian colony.

The U.N. mission helped restore order after a 1998-2003 war killed an estimated 4 million Congolese, mainly through disease and hunger, and the council renewed the mandate for a short time while it awaits another U.N. report on the future configuration of the force.

Ban's report studied the impact of proposed sanctions aimed at punishing those who trade in stolen minerals.

He concluded that sanctions would create an opening for other unscrupulous dealers, rob small miners of income, and possibly create social unrest and a backlash.

"While sanctions may inconvenience their targets, the general effect will be to diminish only marginally the general practices they are designed to curtail," Ban's report said.

"Imposing United Nations sanctions now may be perceived as punitive" against the government sworn into office in December following a lengthy election process. "This might be another reason why United Nations sanctions may not be advisable at the present time," Ban said.

The Security Council was considering sanctions against illegal trade in gold, cassiterite, copper, cobalt and diamonds.

Instead of sanctions, Ban recommended promoting security in mining areas, improving the business climate by discouraging fraud and extortion, and demanding that mining companies adhere to environmental standards.

Congo's five-year civil war drew in most of the vast central African nation's neighbors, some of whom have played active roles in the illegal export of its resources.

Others involved include the Congolese military and various armed militias, the U.N. experts said.

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