* Failure to extend Kyoto Protocol casts shadow on carbon mkt
* Blames poor market conditions for pulling $1.3 bln IPO
* Investors worry about prospects of China renewable firms
* Datang Renewable prices HK IPO at low end, raises $640 mln (Adds detail, analyst comment, story links)
By Leonora Walet and Donny Kwok
HONG KONG, Dec 13 (Reuters) - Huaneng Renewables Corp, China's No.3 wind company, pulled its up to $1.3 billion initial public offering as a stalemate at the U.N. climate talks and a weak Hong Kong market hurt investor appetite.
Larger rival China Datang Renewable Corp priced its Hong Kong IPO at the low end of an earlier indicated range, a source familiar with the deal said on Monday, as global talks in the Mexican resort town of Cancun did little to ensure mandatory caps on greenhouse gas emissions would be extended next year.
"Failure of world leaders at Cancun to agree on extending the Kyoto Protocol casts shadows on carbon markets and worried investors about the prospect of Chinese renewable firms," said Yuanta Research analyst Min Li.
China is among the biggest beneficiaries of the Kyoto pact which promotes a system where companies in developing nations earn U.N. credits for helping prevent the release of carbon dioxide in the atmosphere by building clean energy projects.
World leaders delayed the task of extending the Kyoto pact, due to expire in 2012, until next year's talks in South Africa.
Carbon offset markets worth $20 billion last year depend on Kyoto emission caps to drive developed countries to pay for cuts in greenhouse gases in developing nations. [ID:nLDE6BA051]
SECTOR STRUGGLES
News of Huaneng Renewables' decision to pull its IPO may adversely impact Sinovel Wind's planned $526 million A-share offering in Shanghai.
The company, which received a go-ahead from securities regulator for its IPO on Friday, said it will issue 105.1 million shares, with proceeds to be used for expanding its wind capacity. [ID:nTOE6B907X]
Datang, with ranks No.2 in China behind Longyuan Power Group priced its offering at HK$2.33, at the low end of a HK$2.33-HK$3.18 per share range, raising about $640 million.
Datang originally aimed to raise up to $1.5 billion from its Hong Kong IPO. A total of 2.14 billion shares were sold, the source added.
"Positive sentiment seems lacking in the sector given difficulty in getting any certainty that subsidies will continue," said Li.
"For China, without the CDM (clean development mechanism) profits of some renewable energy projects may be affected," he said.
The Chinese renewable energy firms struggled to attract investors to their initial offering against a backdrop of either underperformance or cancellation of other international green IPOs.
Enel Green Power (EGP) , which generates clean energy from hydro and geothermal to wind and solar and is Europe's biggest listing since 2008, dropped more than 4 percent on its debut early last month despite a price cut offered to lure investors. [ID:nLDE6A30KY]
First Wind Holdings Inc pulled its Nasdaq initial share offering in November citing unfavourable market conditions.
Boston-based First Wind, mostly owned by private equity firm Madison Dearborn and hedge fund operator D.E. Shaw foresees rapid growth. But wind energy is expensive and financing is complicated. Uncertainties over government support for renewable energy particularly in the U.S. has also dampened sentiment.
Weakness in the sector has also affected more established players.
Shares of Asia's largest wind power generator Longyuan Power lost 6 percent in the week climate talks were concluded.
Shares of solar stocks like Suntech Power Holdings and JA Solar also recorded losses in the period.
"In light of the change in market conditions and recent unexpected and excessive market volatility ... the company has formed the view that it would be inadvisable to proceed with the global offering at this time," Huaneng said in a filing to the Hong Kong stock exchange. (US$1=HK$7.75) (Editing by Jacqueline Wong and Lincoln Feast)