Germany's economy ministry has officially told the European Commission it does not back the imposition of punitive import duties on solar panels from China, a government source told Reuters on Monday.

The Commission, the EU's executive arm, accuses China of pricing its solar panels too cheaply and "dumping" them in Europe to corner the market and plans to impose duties, but Germany has distanced itself from the initiative.

German Chancellor Angela Merkel told Chinese Premier Li Keqiang during talks in Berlin on Sunday that Germany, China's biggest trade partner in Europe, would do everything it could to prevent the trade dispute escalating.

(Reporting by Andreas Rinke, writing by Gareth Jones)