UPDATE 2-REC sees lingering oversupply after weak Q3

* EBITDA down 40 percent to $77 million, misses forecast

* CEO says expects solar overcapacity to continue in 2010

* Expects further solar wafer price cuts for 2010

* Shares rise 1.2 percent

(Adds CEO and analyst comments, details, share price)

By Richard Solem and Joergen Frich

OSLO, Oct 27 (Reuters) - Norwegian solar energy company Renewable Energy Corporation ASA (REC) (REC.OL) said it expected overcapacity and price declines in the solar industry to continue into 2010 after missing third-quarter forecasts.

REC, one of the world's biggest makers of solar energy equipment, said the solar market had been weak, although there were early signs of improved demand for solar modules in some geographical regions.

"Even with an increase in demand, we expect overcapacity within solar energy to continue in 2010," Chief Executive Ole Enger told a presentation.

Enger said REC had reduced prices and volumes for solar wafers considerably this year, and expected additional concessions in current 2010 price negotiations. He added that overdue receivables in the wafer division had been increasing.

"It's regrettable, but we feel we are forced to draw upon bank guarantees," Enger said.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to 429 million crowns ($77.64 million) in July-Sept from 711 million a year ago, and below an average forecast of 466 million in a Reuters poll of 18 analysts.

"This may be a bit disappointing to the market," Argo Securities analyst Henrik Schultz said.

Shares in REC rose 1.2 percent at 0818 GMT to 42.66 crowns, still well below a peak of 267.21 crowns seen in late 2007, as traders said underlying figures were close to expectations.

"The earnings before depreciations were actually a bit better than I expected, but the operating profit and pretax is much worse thanks to the Sovello writedown and hedging costs," Schultz said.