* Ilmarinen cancels rights issue subscription, dumps shares
* Ilmarinen was fourth-biggest owner as of end-March
* Shares fall over 4 pct (Adds comment from Ilmarinen, analyst view, share move)
By Terhi Kinnunen and Ritsuko Ando
HELSINKI, April 12 One of Finnish miner Talvivaara's biggest shareholders has pulled out of a fundraising and sold its shares after the latest waste water leak at the company's mine, raising doubts over its recovery efforts.
Talvivaara shares fell more than 4 percent in Helsinki and London on Friday after Finnish pension insurance firm Ilmarinen, which had owned 5.08 percent of the company's stock at the end of March, said it had sold its investment.
"The decision was impacted by the weaker-than-expected financial success and repeated environmental and production problems, especially during the past year," said Ilmarinen's Timo Ritakallio, deputy CEO and chief investment officer.
Over the past year, Talvivaara's operations have been hit by two waste water leaks, excess rain water and the death of a worker. Last year, it cut its annual production target several times and reported an operating loss of 57 million euros in the fourth quarter.
Talvivaara's 261-million-euro ($343 million) rights issue was aimed at keeping the mine in Sotkamo, eastern Finland, running after the repeated setbacks and clean up costs depleted its coffers.
The rights issue was oversubscribed, but investors were allowed to cancel following the latest leak, discovered on Sunday, which prompted it to shut down its metals plant. Final results of the cash call are due early next week.
Talvivaara's Chief Financial Officer Saila Miettinen-Lahde declined to comment on whether there were other cancellations. The cancellation period ends in London on Friday evening.
"The issue process is still ongoing and the only thing I can say is that the results will be announced when they are ready, early next week," she said.
The rights issue is backed by Talvivaara's three top owners, CEO and founder Pekka Pera, Finnish government investment firm Solidium and mutual pension insurance firm Varma, and is underwritten by five banks.
FIM analyst Markus Liimatainen said it was likely some other investors had also cancelled their subscriptions.
"As a signal, it is not positive," he said.
Talvivaara shares traded at 0.16 euros in Helsinki and 13.5 pence in London around 0730 GMT, close to their record lows marked on Monday.
($1 = 0.7618 euros) (Editing by Tom Pfeiffer and Mark Potter)