* State to sell 230 mln ordinary shares in Nordea
* Says will use proceeds to reduce national debt
* Price range set at 75-76 SEK-source
* Govt seen having more fiscal leeway ahead of 2014 election (Adds price range)
By Mia Shanley and Sven Nordenstam
STOCKHOLM, June 18 (Reuters) - Sweden is selling a 5.7 percent stake in Nordea, the Nordic region's biggest bank, in a move that may give the centre-right ruling coalition some fiscal leeway ahead of an election next year.
The Swedish government, Nordea's second-biggest owner behind Finnish insurer Sampo, said it would sell up to 230 million ordinary shares in Nordea, worth some 18.1 billion Swedish crowns ($2.8 billion) at current market prices, though such bloc sales are usually done at a discount.
It will use the proceeds to reduce the national debt.
A source close to the deal said that price range had been set at 75 to 76 crowns per share. A price in the middle of that range would mean a discount of 4.1 percent to Tuesday's closing price. At the top end of the range the value of the stake would be at $2.7 billion.
On completion of the sale, Sweden's current 13.4 percent stake in Nordea - a legacy of the country's banking crisis in the early 1990s - would be reduced to 7.8 percent. It would be the second sale of the government's stake in around two years.
"The role of the state is to regulate banks, not to own them," Minister of Financial Markets Peter Norman said in a statement. "Bank shares are assets associated with risk and banks require strict regulation ... The approach of the government is therefore to reduce the state's ownership in Nordea."
Nick Davey, an analyst at UBS, said he expected good interest in the sale.
"There is a pretty natural long-term investor base within Europe that are very eager to have a look at companies like Nordea, that have this kind of combination of decent earnings growth and decent dividend yields," Davey said. "So the appetite should be there."
Faced with elections in 2014 and backed by a relatively strong Swedish economy, the country's centre-right coalition government is seen loosening its purse strings in the months ahead.
"Fiscal policy is likely to get more expansionary this year and next year, and this of course adds even more to that expectation, even though it's not a huge sum," said Stefan Mellin, an economist at Danske Markets.
Mellin said Danske had been expecting more income tax cuts by the government ahead of the election as the coalition is running behind the centre-left opposition in opinion polls.
"What they have hinted at is that they would present perhaps some tax cuts for lower and middle income earners," he said.
The finance ministry said the sale would be priced and allocated on June 19.
The sale is targeted at Swedish and international institutional investors through an accelerated bookbuilding by Morgan Stanley as global coordinator and joint bookrunner, with Credit Suisse and SEB as joint bookrunners.
Sweden's coalition government had sped up privatisation during its first term, but was slowed by the 2009 financial crisis as asset prices took a hit.
Sweden's national debt is around 32 percent of GDP, one of the lowest in Europe.
The government last sold a 6.3 percent stake in Nordea in February 2011 at 74.5 crowns, a 5 percent discount to the share price at the time, for a total of 19 billion crowns ($2.9 billion).
UBS's Davey said recent similarly sized bookbuilding processes had been priced at smaller and smaller discounts. "I don't think it will need to be done at the same kind of discounts as at the time of the previous placing," he said.
The government abandoned plans in its second term to sell down its stake in telecoms operator TeliaSonera when it faced political opposition in a minority government. ($1 = 6.4748 Swedish crowns) (Additional reporting by Anna Ringstrom and Patrick Lannin, and Kylie MacLellan in London; Editing by Alistair Scrutton, David Holmes and Marguerita Choy)