* Near 2 pct Barclays stake sold in Dec/Jan -sources
* Temasek likely to have lost over 800 mln stg on investment
* Barclays shares down 5 pct as European banks fall
By Steve Slater and Saeed Azhar
LONDON/SINGAPORE, June 3 Singapore state investor Temasek [TEM.UL] sold its stake in British bank Barclays Plc (BARC.L) several months ago at a big loss, people familiar with the matter said on Wednesday.
After spending over 1 billion pounds ($1.7 billion) on shares in Britain's second-biggest bank in the last two years, unlisted Temasek may have lost over 800 million pounds on the investment, according to calculations by Reuters.
Temasek's loss is in sharp contrast to Abu Dhabi which sold more than 11 percent of the bank's shares on Tuesday, making a $2.5 billion profit in just seven months. [ID:nL2185843]
Temasek sold its near 2 percent stake in December and January, two of the sources said. The sources asked not to be named due to the confidential nature of the investment.
"It's true that they sold in December/January," a person familiar with the deal told Reuters.
It is further evidence that Temasek is shifting away from banks, after it lost about $3 billion on an ill-timed investment in Merrill Lynch.
The fund's incoming CEO Charles Goodyear may cut its large holdings in banks to allocate money to energy and consumer sectors, analysts at Nomura said on Tuesday. [ID:nSIN472073]
By 1357 GMT Barclays shares were down 4.4 percent at 261.5 pence. The European bank sector .SX7P was down 2.4 percent.
Tuesday's placing of shares worth 3.5 billion pounds at 265p each had sated demand among investors and raised concern Abu Dhabi's sale marked the top of the recent rally, dealers said.
Investors are also expected to get the option to buy plenty more stock in the coming months as banks replenish capital or investors cash in on the strong recent run.
U.S. lenders Morgan Stanley (MS.N), JPMorgan Chase (JPM.N) and American Express (AXP.N) have all said this week they plan to sell shares. [ID:nN02496921]
Temasek and Barclays declined to comment, and details of the price it sold at were not known.
Temasek paid 975 million pounds buying Barclays shares at 720 pence apiece in July 2007. It pledged to spend up to 200 million pounds last July to buy more shares at 282p each as part of bigger fundraising, but it never disclosed how many it bought. It would have spent about 90 million pounds to maintain its holding at around 2 percent, giving it 167 million shares. [ID:nL21007909]
Only investors with more than 3 percent need to disclose changes in their holdings.
Barclays shares traded between 136p and 167.8p in December and between 47.3p and 190.6p in January, when the shares crashed to a 24-year low on fears Britain's government would need to inject funds to boost its capital. The weighted average for the shares was 148p in December and 105p in January.
Based on the average of those prices, Temasek would have lost about 850 million pounds ($1.4 billion) on its investment.
Barclays shares have soared more than five-fold from its January low after Britain's regulator said its capital was adequate and business and sentiment across the sector improved.
Temasek owns stakes in a number of financial firms, and losses in several of them last year hit the value of its portfolio.
It invested over $5 billion in Merrill Lynch in late 2007 and took a hit of at least $3 billion when it sold its stake in Merrill's new parent Bank of America (BAC.N) in the first quarter. [ID:nSP484090].
It still holds large stakes in banks such as DBS (DBSM.SI), Standard Chartered (STAN.L) and India's ICICI (ICBK.BO).
(Editing by Erica Billingham and David Cowell)