UPDATE 1-Japan's Mizuho could raise $7 bln in share sale

* To issue up to 3 billion new shares in July

* Could raise 693 bln yen at current share price

* Would increase number of common shares by 27 pct

TOKYO, July 1 (Reuters) - Mizuho Financial Group Inc (8411.T) said it would issue up to 3 billion new shares, which would raise about $7 billion in capital for Japan's second-largest bank at its current stock price.

Mizuho had said in May that it would issue up to 600 billion yen ($6.2 billion) worth of common shares, aiming to bolster a capital base weakened by heavy losses due to a weak economy and sliding value of its massive stock portfolio.

Mizuho said it would decide on the price of the new shares on a day during the period of July 15 to July 17.

The offering, which includes an over-allotment option of nearly 200 million shares, would raise about 693 billion yen for the bank at the current stock price of 231 yen.

It would increase the number of common shares outstanding by 27 percent.

Mizuho rivals Sumitomo Mitsui Financial Group Inc (8316.T) and Mitsubishi UFJ Financial Group (8306.T) have also been raising capital to shore up their balance sheets. ($1=96.81 Yen) (Reporting by Mayumi Negishi and Nathan Layne; Editing by Chris Gallagher)