UPDATE 2-Britain sees strong demand for 2050 linker sale

* 5 bln stg offering size beats expectations

* Orders at 9 bln stg when books closed

* Gilts priced at expensive end of range

(updates, adds comment)

By Christina Fincher

LONDON, Sept 24 (Reuters) - Britain sold 5 billion pounds of index-linked gilts via a syndicate of banks on Thursday, meeting strong demand from investors eager to get their hands on long-dated inflation-proof bonds. The gilts, which mature in March 2050, were priced to yield 4 basis points less than the existing 2047 index-linked gilt -- the tight end of the indicated range -- giving a real yield of 0.539 percent.

"The early signs are that the deal has gone very well," said Richard McGuire, a strategist at RBC. "Pension funds are the natural buyers of this paper and there is strong appetite to hedge liabilities with inflation-linked paper."

Deutsche Bank, Goldman Sachs, HSBC and UBS acted as bookrunners on the deal which was Britain's third syndicated debt offering this year.

The first two gilt syndications -- a 7 billion pound sale of conventional gilts in June and a 5 billion pound sale of index-linked gilts maturing in 2042 in July -- both went well.

Britain has traditionally relied on auctions to sell its debt but record government borrowing has encouraged it to consider additional funding methods.

Although syndication can be a more costly way of raising funds than an auction, it has the advantage of reaching a potentially wider investor base and allowing investors to buy in bigger size.

"There's a structural shortage of index-linked paper in the UK and this is the one chance investors get to buy a big block," said a banker at one of the bookrunners.

One fund manager who did not participate in the deal said he was surprised at how aggressively the gilts were priced.

"The size and the pricing suggests it attracted a lot of demand," he said. "Index-linked auctions are normally for one billion pounds or less, so to get 5 billion away like this is impressive."

Britain plans to raise around 25 billion pounds via syndicated offerings this financial year. Although this is just over a tenth of the country's total planned issuance of 220 billion pounds, it will make Britain one of the most active sovereign issuers in the syndicated market.