UPDATE 1-UK's Landbank ditches $400 mln IPO plan-source

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By Daisy Ku

LONDON, July 7 (Reuters) - UK property company Landbank has ditched a 250 million pound ($405.8 million) initial public offering (IPO) in favour of a private placement instead, a source familiar with the matter told Reuters.

The newly-formed company, which aims to acquire land for residential development, planned a market debut on Wednesday on the junior board of the London Stock Exchange (LSE.L).

The company decided last week it would prefer a private placement to raise 150 million to 250 million pounds.

"The company still hopes to raise a similar amount through a private deal, the process is still going on," the source said.

Landbank's move came after NewRiver Retail, another new UK property firm, last month shelved a plan for a 250 million pound listing on London's Alternative Investment Market (AIM) to have been arranged by Merrill Lynch (BAC.N).

The benchmark FTSE 100 index .FTSE has fallen 3.4 percent since the start of July amid turbulent real estate and equity market conditions.

($1=.6161 Pound)

(Editing by Douwe Miedema and David Cowell)