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UK sells 4.2 bln stg of shares in Lloyds

LONDON, March 26 (Reuters) - Britain sold 4.2 billion pounds ($6.9 billion) of shares in Lloyds Banking Group to cut its stake in the country's largest retail bank to 25 percent and put it on course for a complete exit in the next year at a profit.

UK Financial Investments, the body that manages Britain's stakes in Lloyds and Royal Bank of Scotland, said on Wednesday it sold a 7.8 percent stake in Lloyds, or 5.6 billion shares, at 75.5 pence a share, a 4.6 percent discount to Tuesday's closing price. UKFI announced it was placing the shares after markets closed on Tuesday.

Britain began to offload its 39 percent shareholding in Lloyds last September, which was seen as a milestone in the country's recovery from the 2008 financial crisis, when taxpayers pumped a combined 66 billion pounds into Lloyds and RBS. Bankers and analysts said UKFI could completely sell its stake in Lloyds before a UK election due in 2015.

($1 = 0.6059 British Pounds) (Reporting by Steve Slater; Editing by Huw Jones)