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UPDATE 1-Bank of Ireland raises $313 mln in debt swap

DUBLIN, May 10 (Reuters) - Bank of Ireland raised 233 million euros ($313 million) in a debt for equity swap, taking it a step further in its four-part plan to boost capital by almost 3 billion euros. The government wants to showcase Bank of Ireland as the first Irish lender to fill its capital shortfall from mostly private sources and which can recover from Ireland's property market crash even among turmoil in the wider euro zone. Appetite for Bank of Ireland's offerings will test demand for Irish assets in general after worries about contagion from Greece's debt problems. Ireland's biggest lender by market value has already raised 500 million euros in a strongly subscribed institutional placing and will next week price a fully underwritten rights issue. The result of the debt for equity offer reduces the amount it will seek in the rights issue to 1.72 billion euros from up to 1.885 billion, it said in a statement. With the rest of the debt for equity swap results set aside to boost capital, the transaction also increases the overall capital gain aimed at in the plan -- after expenses and buying back state warrants -- to 2.93 billion euros from 2.8 billion, it said. Shares in the bank, already up strongly after the launch of a $1 trillion global emergency rescue package for the euro zone, extended gains to trade 21.3 percent stronger at 1.722 euros by 1120 GMT. (Reporting by Andras Gergely and Padraic Halpin; Editing by David Cowell) ($1=.7453 Euro) Keywords: BANKOFIRELAND/EQUITY (andras.gergely@reuters.com; +35315001518; Reuters Messaging: andras.gergely.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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