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UPDATE 2-Fairfax-led group to invest in Eurobank in bet on Greek turnaround

* Fairfax, others bid for 47 pct of Eurobank share issue

* Group offers 0.30 euros a share, a 25 pct discount

* Move shows Greece back on investor radar screens

(Recasts with bailout fund picking Fairfax)

ATHENS, April 15 (Reuters) - International investors are to invest 1.3 billion euros ($1.8 billion) in Eurobank to become the bailed-out Greek bank's biggest shareholders in another sign of growing market confidence in Greece.

The country's bank bailout fund HFSF has picked an investment group led by Canada's Fairfax as anchor investors in a share sale needed to plug Eurobank's 2.86 billion euro capital shortfall.

Eurobank, Greece's third-largest bank and 95-percent-owned by the HFSF, is issuing new shares to help to plug the gap revealed last month in a central bank stress test.

The investors' cash will reduce the strain on the Greek government's resources. The less the HFSF spends to replenish Greek banks' capital, the lighter and more manageable the country's debt load becomes.

If Eurobank raises the full 2.86 billion euros from markets this means the HFSF, endowed with 50 billion euros by the European Union under Greece's international bailout, will not have to dip into its remaining 11 billion euro capital buffer.

Eurobank's fundraising plan comes days after Greece's government broke a four-year exile from debt markets with a landmark sale of five-year bonds that raised 3 billion euros.

The bank, with a market value of 2.19 billion euros, follows Alpha and Piraeus, in tapping investors to bolster its equity. National Bank, the country's largest, is also considering a fundraising.

The group of investors, which includes Fairfax, Capital Research and Management, Wilbur Ross, Fidelity, Mackenzie and Brookfield, committed to subscribe to 47 percent or 1.33 billion euros of Eurobank's equity offering at 0.30 euros a share, a 25 percent discount to Tuesday's closing price of 0.40 euros.

Capital Research and Management pledged about 557 million euros for the deal, the largest chunk of the bid. Fairfax signed up for 400 million euros.

Fairfax and Wilbur Ross made a commitment to hold on to the shares for at least six months and said they would actively participate in Eurobank's management.

The HFSF's chief executive said interest by quality investors reflected the turnaround of Greek banks. "We are looking forward to the full coverage of the share capital increase with private participation at the final price which will be determined via the book building process," Anastasia Sakellariou said on Tuesday.

Current shareholders, including the HFSF, will waive rights to the share issue, which will dilute the rescue fund's stake significantly.

'CANADA'S WARREN BUFFETT' COMES TO GREECE

The deal confirms a trend of overseas funds placing small investments in the bailed-out country, betting on a recovery from its deepest postwar economic slump.

It also marks the third major Greek investment by Fairfax, which is controlled by investor Prem Watsa - known as the "Warren Buffett of Canada".

Fairfax has invested in Eurobank's real estate unit and acquired a 5 percent stake in Mytilineos , one of the country's biggest mining and energy groups.

Billionaire investor Wilbur Ross told Reuters last week he was assessing distressed assets in southern European countries such as Greece and looking to make some investments in the next few months.

Barclays, Deutsche Bank and JP Morgan will lead the bookbuilding process aimed at international investors. About 10 percent of the new shares will be offered to domestic investors, the bank's board has said. ($1 = 0.7238 Euros)

(Editing by David Goodman and Jane Merriman)