UPDATE 2-Marshall & Ilsley bank to sell $400 mln stock

* Offering equals about 23 percent of bank's market value

* Previous plan to sell $350 mln stock being terminated

* Sees loan and lease losses about the same in Q2 as Q1

* Shares down 6.5 percent in premarket trade (Recasts; adds details, bank comment clarifying that new stock offering replaces previously announced offering)

NEW YORK, June 11 (Reuters) - Marshall & Ilsley Corp (MI.N), which took $1.72 billion of federal bailout money, said it plans to sell $400 million of common stock.

The Milwaukee-based bank said on Thursday it intends to use net proceeds to boost capital or for general corporate purposes, with net proceeds totaling about $384 million.

Marshall & Ilsley said it may boost the offering to $460 million to meet demand. The offering replaces a plan announced three weeks ago to sell $350 million of stock in an "at-the-market" offering.

According to Reuters data, the proposed stock issuance equals about 23 percent of the bank's market value, which was $1.71 billion as of Wednesday. Marshall & Ilsley shares fell 42 cents to $6.00 in premarket trading.

The bank joins other lenders, including SunTrust Banks Inc (STI.N), that are selling stock quickly rather than over time to benefit from improved investor appetite for bank stocks.

Marshall & Ilsley shares have roughly doubled over the last three months.

"The advantage of a marketed deal is the ability to raise capital in a shorter period of time," bank spokesman Dave Urban said. "We thought there was an advantage doing that, given current market conditions."

Separately, Marshall & Ilsley said it expects to set aside about as much for loan and lease losses in the second quarter as the $477.9 million it set aside in the first quarter, and that net charge-offs will be roughly equal to the provision.

The bank is one of the largest U.S. lenders not to have undergone government "stress tests" of its ability to handle a deep recession.

Morgan Stanley and Barclays Capital are arranging the stock offering. (Reporting by Jonathan Stempel; editing by John Wallace)