UPDATE 2-Spain extends Bankia stake sale period until end 2021

(Changes source after govt confirms stake sale period extended)

MADRID, Dec 21 (Reuters) - Spain’s government said on Friday it had extended the sale period of its stake in Bankia until the end of 2021 from the original date of before the end of 2019.

The Spanish state is gradually selling off its 61.4 percent stake in the lender after pumping 22.4 billion euros ($25.7 billion) into a rescue package for Bankia in 2012 at the height of the financial crisis.

“The extension will allow the (bank bailout fund) Frob to exercise a divestment strategy that is more flexible in finding the right conditions in capital markets,” the economy ministry said in a statement.

It is the second time the stake sale has been put on hold after the original self-imposed deadline of 2017 was put back to 2019 in 2016.

The delay was widely expected after Prime Minister Pedro Sanchez said at end of November that market conditions were not right and highlighted its low share price.

The Spanish government sold a 7.5 percent stake in 2014 and a 7 percent stake in 2017.

Bankia’s share price was down 2.5 percent on Friday, leading losers on the Ibex, and has fallen over 35 percent year to date, dragged down by ultra low interest rates and global uncertainties surrounding Brexit, Italy and trade. ($1 = 0.8720 euros) (Reporting by Carlos Ruano; Writing by Paul Day; Editing by Jose Elias Rodriguez, David Evans and Kirsten Donovan)