UPDATE 1-Australian state sells A$1.5 bln stake in QR National

* State cuts stake in QR National in half to 16 pct

* QR National to buy back A$1 bln of state's shares

* QR National shares jump 5 pct

(Adds State, QR comments)

MELBOURNE, Oct 8 (Reuters) - Australia's Queensland state government said on Monday it was selling $1.5 billion worth of shares in QR National , the country's top coal-freight operator, with the company planning to buy back two-thirds of those shares.

QR National said separately it would buy back A$1 billion of the shares from the state.

The announcements sent QR's shares up 5.2 percent to A$3.65, as the company's shares had been under pressure not only from a weak outlook for the coal market but also on anticipation of a big selldown by the state.

The government's sale at A$3.47 a share, in line with QR National's closing price last Friday, will more than halve Queensland's stake in the former state-owned rail company to 16 percent, the state's treasurer said.

"Whilst the Government will continue to review its investment in QR National, we have no current intention to sell any of our remaining shares in the near term," Treasurer Tim Nicholls said in a statement.

QR National had already announced a buyback of up to 10 percent of its shares in August, and has so far bought A$50 million worth of shares.

It said the buyback of the state's shares would replace the on-market buyback, if approved by shareholders in November.

Monday's sale would reap a A$400 million gain for the state, which privatised QR National two years ago at A$2.55 a share.

(Reporting by Sonali Paul; Editing by Richard Pullin)

((Sonali.Paul@thomsonreuters.com)(+61 3 9286 1419)(Reuters Messaging: sonali.paul.thomsonreuters.com@reuters.net))