* Q2 sales 142 million eur vs 225 million in Q1
* Q2 EBIT loss 62 million eur; says market still difficult
* Sees tough H2, pricing pressure to continue -CFO
* Shares down 13 percent, other solar stocks fall
* H2 recovery in doubt (Rewrites, adds CEO comments, First Solar share indication)
By Christoph Steitz
FRANKFURT, July 14 (Reuters) - Q-Cells SE, the world's biggest maker of solar cells, dropped its full-year sales outlook after prices fell sharply in the second quarter, denting hopes of a recovery and sending shares across the sector lower.
Solar cell makers have been hit by a steep decline in prices for cells, mainly caused by an oversupply that built up during the boom years of 2007 and 2008.
Q-Cells Chief Executive Anton Milner told analysts on Tuesday that the second-quarter price fall was much worse than the company had expected. "Prices accelerated down in the second quarter," he said.
Earlier this month, Q-Cells said it was not planning to issue a profit warning, denying market talk that had driven its shares down. In May, the company slashed its 2009 sales outlook for the third time in six months.
Shares in solar stocks in Europe and the U.S fell after the news, with Q-Cells leading the pack, down 13.2 percent, while German peers SolarWorld, Solon, and Phoenix Solar were all down 2.3 to 3.2 percent.
U.S.-listed First Solar, Suntech and SunPower also dropped between 1.7 to 3.2 percent.
Shares in Norwegian peer REC fell up to 3 percent before gaining 0.8 percent, after it said a recent rights issue was 60 percent oversubscribed, while London-listed PV Crystalox was 4.1 percent lower.
"(The case of) Q-Cells is more problematic since it suggests the company has problems with the Asian competition that can produce at much lower prices," said Philippe de Weck, fund manager at Pictet, who is managing the company's Clean Energy fund.
Q-Cells's Japanese competitors Sharp Corp and Kyocera, were down 0.3 percent and up 0.5 percent respectively in Frankfurt trade, albeit at very low trading volumes.
Q-Cells said on Tuesday it no longer expects sales to reach 1.3 billion to 1.6 billion euros, adding that it is was not possible to make a reliable forecast.
A HUGE DISAPPOINTMENT
"The (Q-Cells) numbers are a huge disappointment. After the departure of CFO Schuening a few weeks ago, the company strongly denied that this had something to do with weak Q2 results," DZ Bank analyst Sven Kuerten wrote in a note, referring to the finance director who resigned in June.
Q-Cells said second-quarter sales fell to 142 million euros from 310 million a year ago, posting a loss before interest and tax of 62 million euros, down from a profit of 60 million.
The move also raises questions about whether the industry will recover in the second half, as many companies have hoped, following a slowdown in price falls as well as stimulus packages in the United States and China.
Q-Cells's warning, a recent profit warning from industry bellwether Phoenix Solar as well as negative statements by LDK Solar have raised concerns that such a positive outlook might not be based on concrete evidence.
Nedim Cen, who took over as chief financial officer from Hartmut Schuening at Q-Cells last month, said sales would remain under pressure in the second quarter.
"Regarding prices, we expect a very tough environment (in the second half of the year)," he told a conference call.
However, the chief executive of SolarWorld, Frank Asbeck was more positive, saying he did not expect any nasty surprises in its financial results.
The cash-hungry solar sector has also been hurt by the global credit squeeze that has made refinancing difficult, sparking a wide range of share issues and placements.
Q-Cells recently raised 780 million euros ($1.09 billion) in cash by issuing a convertible bond as well as selling a 17.2 percent stake in Norwegian peer REC.
Milner told Reuters in late May that it had no plans to further beef up its finances.
(Additional reporting by Anneli Palmen in Duesseldorf and Stephen James in New York; Editing by John Stonestreet and Erica Billingham)