UPDATE 2-Solar shares hit as Norway's REC cuts output

* REC cuts Q2 solar cell, module production by 50 pct

* Does not expect changes in Q3 and Q4 production

* Shares down 7.5 pct, peers also suffer

(Adds details, background, analysts, updates share price)

By Aasa Christine Stoltz and Richard Solem

OSLO, April 3 (Reuters) - Shares in solar industry group Renewable Energy Corporation (REC) (REC.OL) plunged after it said it would cut solar cell and module production in the second quarter by nearly 50 percent to adjust to weak markets.

Norwegian REC said it planned to restart halted production from July 1 to comply with supply contracts and that it did not envisage more changes in volumes in the second half of 2009.

Demand for solar panels has dropped sharply during the global crisis, sending prices for raw materials such as polysilicon tumbling, and hurting profits of solar energy component makers.

"The main reason (for the cut) lies in demand and the market," John Andersen, head of REC's Solar unit, told Reuters, adding that sales had been weaker than expected, particularly in the first half of the first quarter of 2009.