UPDATE 1-Direct Line's IPO order book full - sources

* Book fully covered 3 days into 9 day roadshow - sources

* Buyers found for all shares being marketed - sources

* Spread betters offering 179-189 pence range

(Adds details, source comment)

By Matt Scuffham and Myles Neligan

LONDON, Oct 3 (Reuters) - Order books for the London stock market listing of Royal Bank of Scotland's insurance business, Direct Line Group, have been covered three days into a nine day investor roadshow, sources close to the transaction said on Wednesday.

RBS, 82 percent government-owned after receiving a bailout during the 2008 financial crisis, was told to sell Direct Line by EU regulators as a condition for taking state aid.

"The book is now fully covered within the range and to get that done three days in is pretty encouraging," one source said, referring to the 160-195 pence price range published last week.

Another source said banks handling the sale had so far focused on British investors but would now market the shares in North America and continental Europe.

RBS is offering up to 33 percent of Direct Line. The business, Britain's biggest motor insurer, would have a market value of 2.66 billion pounds ($4.29 billion) at the mid-point of the price range.

If priced at 195 pence, the insurer could raise as much as 975 million pounds, in London's biggest initial public offering in over a year. Order books, which opened on Sept. 28, are due to close on Oct. 10.

British spread betting firm ETX Capital was on Wednesday quoting a spread of 179 pence to 189 pence on Direct Line shares, up from 177 pence to 187 pence on Tuesday, reflecting investor expectations of a higher offer price.

That gives investors the opportunity to bet the stock will either rise above 189 pence or fall below 179 pence when it starts trading.

Edinburgh-based RBS has been under political pressure to secure a good price for Direct Line to help reduce the British taxpayer's current loss of 22 billion pounds on the 45 billion the government pumped into the bank to secure its future.

There had been fears that the offer could struggle to attract investors after Britain's anti-trust regulators last month launched an investigation into the car insurance market over fears consumers are being overcharged, creating uncertainty about future rules governing the industry.

The shares are being offered to retail investors as well as institutions, although retail buyers will need to make a minimum application of 1,000 pounds. On Monday, stockbrokers involved in the listing reported good interest from private investors.

Goldman Sachs and Morgan Stanley are running the offering, and are joint bookrunners with UBS . RBS and Direct Line declined to comment. ($1 = 0.6196 British pounds)

(Additional reporting by Steve Slater; Editing by Helen Massy-Beresford)


Messaging: matthew.scuffham.reuters.com@reuters.net))