WRAPUP 1-Investors flee solar on Yingli view, LDK debt woes

* Yingli sees Q2 margins lower than Q1

* LDK backs forecasts but delays debt offering

* Solar stocks continue broad selloff (Wraps together Yingli, LDK announcements)

LOS ANGELES, May 20 (Reuters) - Solar stocks logged another day of heavy losses on Friday after Yingli Green Energy Holding Co Ltd (YGE.N) said profit margins were deteriorating and rival LDK Solar Co Ltd (LDK.N) delayed a debt offering that had been intended to assuage concerns about its balance sheet.

Yingli's disappointing margin forecast came three days after another Chinese panel maker, Trina Solar Ltd (TSL.N), said its profit margins in the current quarter would be hurt by rising global inventories that are sending prices on solar panels down faster than producers can cut costs.

The announcements have fueled a broad selloff in solar stocks that has sent the Guggenheim Solar ETF (TAN) down nearly 15 percent so far this month.

Cuts to generous government subsidies for solar power in Italy, the world's No. 2 solar market behind Germany, have caused a glut of solar panels in the market. Manufacturers are now scrambling to slash prices to move inventories.

"We are looking at an industry that in the future will operate at lower margins. If you want solar to be a ubiquitous product in every country, it should be somewhat more commoditized," said analyst Paul Clegg of Mizuho Securities USA.

On Friday, Yingli said the fast-growing solar market in its home country of China will help it meet full-year shipment forecasts, but gross margins in the current quarter will slip from the prior period. [ID:nL4E7GK1KP]

Yingli shares were down 79 cents, or 7.9 percent, at $9.17 in afternoon trade on the New York Stock Exchange. Earlier in the session, the stock hit levels unseen since last June.

LDK Solar shares also fell to levels untouched since September, a day after the company announced a delay in a sale of senior notes. Proceeds from the sale had been intended to help pay down the company's short-term debt. The company has total debt of about $1.8 billion.

LDK has been planning to spin off its operations that produce polysilicon, the key raw material used to make most solar modules, in an effort to trim that debt.

"With LDK likely in need of additional cash in 2011 and a poly plant spinout looking harder as pricing falls, we expect shares to remain under pressure," Wachovia analyst Sam Dubinsky said in a note to investors.

Also on Friday, LDK backed its first-quarter and full-year financial outlooks. [ID:nN20237083]

Industry volumes are expected to pick up as prices drop. Most major solar manufacturers are increasing manufacturing capacity to expand their market share even though key markets in Europe are trimming subsidies.

"The Italian markets, which were pretty much closed in the first half, will be reopened in the second half. So there are plenty of reasons to believe they will be able to increase their volumes in the second half of the year," Clegg said.

Yingli, one of the largest producers of solar equipment, expects to triple China's contribution to its revenue to 11 percent to 13 percent in 2011.

The Chinese government is planning 10 GW and 50 GW of installation targets by 2015 and 2020, respectively, the company said. (Reporting by Swetha Gopinath and Krishna N Das in Bangalore, Nichola Groom in Los Angeles and Matt Daily in New York; Editing by Don Sebastian and Steve Orlofsky)