UPDATE 2-Trinity Mirror buys Guardian's regional newspapers

* Deal will raise Trinity Mirror's market share to 23 pct

* Most of consideration is release from printing contract

* GMG to transfer 800 staff

(Adds details on components of deal, shares, background)

By Georgina Prodhan and Paul Sandle

LONDON, Feb 9 (Reuters) - Trinity Mirror (TNI.L) has agreed to buy Guardian Media Group's local newspapers for 44.8 million pounds ($69.8 million) to extend its regional reach, the first major step in consolidating Britain's battered local media.

The two companies said on Tuesday Trinity Mirror would pay 7.4 million pounds in cash and release GMG from a long-term printing contract worth 37.4 million pounds in exchange for the stable of titles including the Manchester Evening News.

GMG, whose core news business is loss-making, said the deal would help secure the future of its national titles. The company is owned by a trust that is charged with ensuring the future of its flagship Guardian national daily newspaper.

"We believe Trinity Mirror, as one of the UK's biggest regional publishers, is best placed to develop this business in a market that is likely to consolidate further," said GMG, which will transfer about 800 staff as part of the deal.

The Guardian began life as the Manchester Guardian in 1821. It had said in December it was in exploratory talks about the consolidation of its regional titles but was not on the verge then of selling the Manchester Evening News.

Local media, especially newspapers, have suffered a slump in classified ad revenues during the recession as the job, property and auto markets dried up -- hurting them more than national media, which were still able to attract some brand advertising.

Trinity Mirror, whose top title is the national Daily Mirror tabloid and which also owns about 120 regional newspapers, said GMG's 32 regional titles and 44 associated Web sites would increase its market share to 23 from 19 percent.

The acqusition will also help it build up its digital operations, which are profitable, and give it a presence in the Greater Manchester area and some new areas of southern England.

The Guardian has a huge Web presence but has not yet figured out how to make it pay.

The businesses it is selling to Trinity Mirror just broke even at operating level in the 12 months to December 2009 and had gross assets of 8.7 million pounds.

Shares in Trinity Mirror were down 0.5 percent to 137.2 pence by 1146 GMT, in line with the wider market.

The deal excludes Greater Manchester TV station Channel M and two newspapers in Woking.