UPDATE 3-Japan's Orix to raise $1 bln in share sale -sources

* To announce share sale as early as this week-sources

* Follows 150 bln yen convertible bond last year

* Offering comes amid signs property market bottoming out

* Shares fall 5 percent, broader market up 0.5 percent (Adds credit risk information in paragraph 10)

By Junko Fujita and Nathan Layne

TOKYO, July 1 (Reuters) - Orix Corp (8591.T), Japan's biggest leasing firm and a major property investor, plans to raise about 100 billion yen ($1 billion) through a public share offering, three sources said, sending its shares sliding 5 percent.

Orix would become the latest in a series of Japanese financial firms to tap more recently buoyant equity markets for funds, amid signs the economy and property market to which it is heavily exposed may have bottomed out.

Raising 100 billion yen would require Orix to issue about 17 million new shares at Tuesday's closing price, increasing its number of shares outstanding by roughly 20 percent.

The company plans to make the share sale a global offering, with an official announcement as early as this week, the people told Reuters, speaking on condition of anonymity because they are not authorised to comment publicly about the deal.

Orix said in a statement that nothing had been decided.

A public share offering would follow a 150 billion yen convertible bond sale announced in November last year.

News of the convertible bond, coupled with concerns over its ability to raise funds and exposure to the deteriorating property market, helped fuel a three-month slide of some 80 percent in its stock price to a low around 1,700 yen in late February.

Orix's stock has since recovered some of that lost ground, although it fell 5 percent on Wednesday to 5,520 yen on the share sale news. The Nikkei benchmark average .N225 was up 0.5 percent.

Concern about Orix's ability to secure funds has also pushed wider the spread on its credit default swaps, a measurement of credit risk.

The spread was at 595 basis points as of June 26, according to a UBS Securities Japan report, compared with 510 basis points a month ago.

It also made a filing on Tuesday to sell up to 700 billion yen in bonds in Japan, ahead of the expiry of its current filing on July 4. The company had 7.2 trillion yen debt as of March.

Orix has been shrinking its asset base and slashing debt as a fallout from the global credit crisis sliced into its profits and balance sheet. But it has also been looking to take advantage of the crisis to make opportunistic investments.

Orix President Yukio Yanase told Reuters in an interview earlier this year that he was planning to partner with other investors to put a few billion dollars into real estate and other assets discounted by the financial crisis. [ID:nT268270]

Orix posted an 87 percent fall in net profit for the year ended March 31, hit by bad loan provisions, a drop in property sales and writedowns of its investments including in condominium developer Daikyo (8840.T).

Orix said in May it expects net profit to rise 37 percent to 30 billion yen in the current financial year to March 2010. ($1=95.41 Yen) (Additional reporting by Taro Fuse; Editing by David Cowell and Edwina Gibbs)