UPDATE 1-Lloyds reaches deal to sell $500 mln in shipping loans -sources

(Adds detail, comment)

LONDON, April 30 (Reuters) - Lloyds Banking Group has reached an agreement to sell $500 million of shipping loans from its remaining ship finance portfolio, finance and banking sources familiar with the matter said on Wednesday.

The deal is the latest in a flurry of sales of ship finance loans, many of which are being put up for sale by banks under pressure to boost their capital to comply with new, stricter industry legislation since the financial crisis.

Bank of America and U.S. hedge fund Davidson Kempner Capital Management were expected to buy the Lloyds loans, one of the sources said. Another source added that the terms of the deal were being finalised.

Lloyds, Bank of America and Davidson Kempner all declined to comment.

Pricing on the deal was in the region of 80 percent of the value of the loans, one of the sources said.

In February, finance and banking sources said Lloyds was looking to the sell the $500 million tranche as the state-backed bank cuts the size of its balance sheet to reduce risk.

(Editing by David Goodman)