* Shares rise 11 pct after opening at IPO price of 1,600 yen
* Seibu delisted a decade ago after scandal
* Cerberus stake may weigh on share price -analyst
* Seibu CEO says relationship with Cerberus good (Recasts with stock closing, adds CEO comment, context)
By Ritsuko Ando
TOKYO, April 23 (Reuters) - Seibu Holdings Inc rose almost 11 percent on its first day of relisting on the Tokyo stock market, after its IPO price was slashed due to growing doubts over the strength of Japan's economic recovery.
The railway and property company was delisted a decade ago after a scandal involving falsified shareholder records. Its shares opened at 1,600 yen on Wednesday, in line with its initial public offering price, and then closed 10.6 percent higher at 1,770 yen, outperforming the Nikkei 225 average which finished up 1.1 percent.
The stock was the eighth-most traded on the main index.
Seibu's relisting after a 547 billion yen ($5.3 billion) IPO was originally expected to herald revived interest in Japan's property market as well as the exit of top shareholder Cerberus from a volatile relationship with the company's management.
Instead, it highlighted weakened investor enthusiasm for Japanese equity as confidence in Prime Minister Shinzo Abe's economic stimulus policies fades.
Underwriters had lowered the IPO price after investors balked at the initial estimate of 2,300 yen. The drop prompted Cerberus to forego selling any of its 35.5 percent stake.
People familiar with the IPO process said Cerberus had sought to sell its holding at more than 2,000 yen a share, a price underwriters deemed too high after weak IPOs by companies such as smartphone screen maker Japan Display Inc and battery maker Hitachi Maxell Ltd.
Japan Display is currently trading at 13 percent below its IPO price while Hitachi Maxell is 11 percent lower.
Speaking after the market closed, Seibu CEO Takashi Goto said he was relieved at the shares' performance. "To be honest, I thought it was good," he told reporters.
Analysts said, however, that gains in Seibu's shares are likely to be limited by speculation that Cerberus could sell its stake once the stock hits the 2,000 yen level.
Cerberus was said to have paid an average of around 1,000 yen for each Seibu share when it led a bailout of the Saitama-based company in 2006, although the fund has never confirmed the price.
Over the years, the relationship between Seibu and Cerberus came to symbolise the tensions between Japanese management teams and foreign funds. The battle included a failed attempt by the U.S. fund to take control of the Japanese company's board.
CEO Goto said the Seibu and Cerberus had now established a "trusting relationship", with the fund promising to not interfere with the company's management. Seibu was also now committed to improving shareholder returns and corporate governance, he added. ($1 = 102.6000 Japanese Yen) (Additional reporting by Takashi Umekawa; Editing by Dominic Lau and Miral Fahmy)