* Guidance cut reflects recent equity needs in Brazil - email
* Says working with banks, potential investors on rights issue
* Shares gain 9.5 percent to 1.2 euros on a rebound (Adds details, background and shares)
MADRID, Aug 6 (Reuters) - Indebted Spanish engineering and energy group Abengoa said on Thursday that a decision to slash its 2015 cash flow target was taken recently, triggered by an unexpected need to inject cash at projects in Brazil.
Abengoa, which builds and runs biofuel and thermal solar plants, cut its 2015 corporate cash flow target by about 50 percent on Friday and on Monday announced a surprise 650 million euro rights issue.
The moves sparked sharp falls in its share price, only two weeks after the company sold nearly 100 million euros worth of shares held as treasury stock at 2.8 euros per share. The stock was trading on Thursday at 1.2 euros each, up 9.5 percent on a rebound from recent declines.
"(The cash flow decision) was taken very recently (...) as a consequence of the deviation in the amount of debt of our projects in Brazil," Abengoa said in an emailed response to questions by Reuters on Thursday.
Management did not know it was about to slash guidance when it sold stock in mid-July, Abengoa said in a separate email to IFR, a Thomson Reuters service.
The Seville-based company is building electricity lines in Brazil, which it had planned to finance primarily through debt but now expects an equal split between debt and equity.
The rights issue decision, which followed CEO Santiago Seage's denials of such a move on Friday, was a result of "changes in credit markets that led us to reconsider a capital hike to speed up our deleveraging," it said in the email to Reuters.
The company said it is working with various banks and several potential large investors to close the rights issue -- which could dilute shareholders' capital by about 60 per cent -- as soon as possible.
Abengoa, with a market value of 1 billion euros and net debt of 6.6 billion euros, said its financing costs have not risen as a result of the sharp fall in its stock and bonds.
In addition to the rights issue, the company has said it will sell assets and cut costs as part of measures to boost liquidity and recover investor confidence. ($1 = 0.9192 euros) (Reporting by Jose Elias Rodriguez; Writing by Tracy Rucinski; editing by Adrian Croft)