UPDATE 1-TPG breaks off talks over stake sale -FT

(Adds TPG declining to comment, paragraph 5)

LONDON Feb 3 (Reuters) - U.S. private equity firm TPG [TPG.UL] has broken off talks to sell a stake in itself to investors including Kuwait's sovereign wealth fund and two California state pension funds, the Financial Times reported.

The FT, citing people familiar with the matter, said the talks had spanned two years and broke down over valuing TPG, which has also given up thoughts of an initial public offering, at least for the time being.

The newspaper said TPG had hoped to be valued in line with rivals such as Blackstone (BX.N), which sold shares to the public in 2007.

But it said potential investors including the Kuwait Investment Authority (KIA), the California Public Employees' Retirement System and the California State Teachers' Retirement System resisted the notion that 2007 valuations were still relevant.

A TPG spokeswoman declined to comment. (Reporting by Quentin Webb; Editing by Gary Hill)