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Chinese Solar Stocks Fall on Forecast for Slower European Demand

Chinese solar companies led by LDK Solar Co. tumbled in New York after Jefferies Group Inc. said European demand for solar panels has slowed.

LDK, the world’s second-largest maker of wafers, declined 7 percent to $1.98 in New York a day after surging 17 percent, its biggest gain in five months.

LDK, Trina Solar Ltd. and Yingli Green Energy Holding Co. rose yesterday after First Solar Inc., the world’s largest maker of thin-film panels, said it plans to increase production at its factory in Frankfurt an der Oder, Germany. Jefferies analyst Jesse Pichel, in a note to investors today, said First Solar’s 21 percent advance yesterday was “not warranted” as German demand is “lower than expected” and Italy has “slowed markedly.”

“There was optimism in the market yesterday that demand in Germany was not so bad based on First Solar’s actions,” David Smith, the portfolio manager of the Gabelli Green Fund, said by phone from Purchase, New York. “Today, there’s recognition that the demand pop is not really true, and that the reality with LDK is that they have a very stressed balance sheet and a cash flow problem, which was overlooked yesterday.”

Xinyu, Jiangxi province-based LDK reported a net loss of $588.7 million in the fourth quarter, more than five times analysts’ estimates of $109.7 million. LDK reported net debt of $2.9 billion in the fourth quarter.

Trina, China’s third-biggest maker of solar panels, fell 6.5 percent to $6.21 a day after gaining 8.3 percent, while Yingli, China’s second-biggest solar-panel maker, slipped 2.2 percent to $2.68 after advancing 5.4 percent yesterday. First Solar dropped 7.4 percent, its largest decline in a month, to $13.84.

“Until macro concerns abate in southern Europe, solar growth can be expected to be subdued,” Pichel wrote.

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