UPDATE 2-SolarWorld sees strong 2011 as Q2 beats forecasts

* Q2 EBIT 56 mln eur vs 42 mln Thomson Reuters I/B/E/S

* Q2 sales 383 mln eur vs 339 mln Thomson Reuters I/B/E/S

* CFO says expects global market to grow next year

* Sticks to 2010 sales outlook of more than 1.01 bln eur-CEO

* Shares 1.4 pct higher at 0816 GMT (Adds CEO, analyst comments, background)

By Christoph Steitz and Anneli Palmen

FRANKFURT, July 29 (Reuters) - SolarWorld (SWVG.DE), Germany's biggest solar company by sales, is confident the global solar market can grow in 2011 in spite of sector subsidy cuts, after posting higher than expected quarterly results.

The industry is divided about whether the solar market will collapse next year, as sector subsidy cuts in Germany, the world's biggest solar market, and No. 2 Italy threaten to curb demand. [ID:nLDE666274]

Norwegian peer Renewable Energy Corp (REC.OL) last week had delivered higher-than-expected quarterly profits but warned that solar subsidy cuts in Germany and Italy could hit the global solar market next year. [ID:nLDE66J03J]

"We believe we're still in a growth market and that the solar sector will grow next year, even though I don't know at what rate," SolarWorld finance chief Philipp Koecke said.

Chief Executive Frank Asbeck, sometimes nicknamed "The Sun King", said that he saw the German market dropping moderately in the second half of the year, but that this would be more than offset by resilient demand in Italy. [ID:nWEA1819]

SolarWorld, which made headlines in late 2008 by making a surprise takeover bid for General Motor's [GM.UL] German Opel unit, said on Thursday that strong demand in its home market helped it to boost second-quarter earnings.

It also stuck to its 2010 outlook, aiming to boost sales from last year's 1.01 billion euros ($1.31 billion), a guidance that analysts have called modest given the Thomson Reuters I/B/E/S estimate of 1.234 billion for full-year sales.

STELLAR Q2, CONCERNS REMAIN

Solar players around the world are expected to deliver stellar results as customers in Germany, the world's largest solar market, pile in on solar modules, taking advantage of feed-in tariffs before they are cut. [ID:nLDE66D1RM]

The German Federal Network Agency earlier this week said Germany added a record of about 3.4 gigawatts (GW) of photovoltaic (PV) capacity in the first half of 2010, compared with a total of 3.8 GW for all of last year. [ID:nLDE66Q22Q]

SolarWorld, releasing some key results ahead of the official Aug. 11 release date, said second-quarter earnings before interest and tax (EBIT) came in at 56 million euros, while sales reached 383 million, beating Thomson Reuters I/B/E/S estimates.

"Results were strong, no doubt, but the question is whether it is a sustainable trend. The market is concerned about limited visibility regarding next year, with risks attached including a new overcapacity crisis," said Michael Tappeiner, analyst at UniCredit.

The solar sector was thrown into crisis in late 2008, when a toxic mixture of overcapacities, dried up credit lines and a resulting plunge in average selling prices led sector players, such as Q-Cells (QCEG.DE), to post record losses in 2009.

By 0816 GMT, shares in SolarWorld were 2.7 percent higher, also lifting peers such as Conergy CGYG.DE and Q-Cells and outperforming a 0.1 percent rise in the FSTE cleantech index .FTET50. ($1=.7684 Euro) (Editing by Knut Engelmann and Simon Jessop)