Direct Line IPO price now 170-177.5 pence - sources

LONDON, Oct 9 (Reuters) - Royal Bank of Scotlandwill offer at least 30 percent of shares in its insurancebusiness Direct Line at a price of between 170 pence and 177.5pence per share, sources close to the transaction told Reuterson Tuesday.

The part-nationalised bank had initially set a range ofbetween 160 pence and 195 pence for the offering and had said itwould sell between 25 percent and 33 percent.

RBS will now raise a minimum of 765 million pounds ($1.2billion) from the sale.

The bank, which is 82 percent owned by the government afterreceiving a bailout during the 2008 financial crisis, was toldto sell Direct Line by EU regulators as a condition for takingstate aid.($1 = 0.6251 British pounds)

(Reporting by Matt Scuffham and Kylie MacLellan)

((matthew.scuffham@thomsonreuters.com; 02075426734; ReutersMessaging: matthew.scuffham.reuters.com@reuters.net))