UPDATE 1-Q-Cells declines to comment on REC stake sale rumour

(Adds comment's from Q-Cells, REC and background)

LONDON/FRANKFURT, May 28 (Reuters) - German solar cell maker Q-Cells (QCEG.DE) declined to comment on market rumours on Wednesday that it was planning to sell its stake in Norway's Renewable Energy Corporation (REC.OL).

REC shares fell as much as 3.7 percent and were down 1.9 percent at 157.50 Norwegian crowns at 1111 GMT, while Q-Cells shares were down 3.7 percent at 73.53 euros.

A trader said earlier in the day that he did not believe that Q-Cells would sell in the short term but added, "At some point they might need some cash to expand and therefore selling the REC stake might be one possibility."

A spokesman for Q-Cells, which holds 17.9 percent of REC according to Reuters data, declined to comment. REC was not immediately available for comment.

Solar stocks were down across the board in Germany's technology index .TECDAX as traders said investors worried that planned cuts in the country's feed-in tariff system could turn out worse than expected. A law on tariffs for contributing power to the grid is currently under review.

Q-Cells, the world's largest solar cell maker, is in the middle of a massive ramp-up in capacity and recently announced plans to set up a solar-cell production plant in Malaysia to tap new growth markets and protect against currency fluctuations.

For similar reasons, it now also plans to set up a thin-film module production plant in Mexico, near the U.S. border, it said late on Tuesday.

It earmarked investments of up to $3.5 billion mid to long term for the project in which it cooperates with the Mexican government, the government of the northern Mexican state Baja California and Silicon Border Development, an operator of industrial parks, it said. (Reporting by Patrizia Kokot, Sitaraman Shankar and Eva Kuehnen in Frankfurt; additional reporting Wojciech Moskwa in Oslo; Editing by Quentin Bryar)