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(Corrects final paragraph to show press release was from UKFIand not the Treasury)
By Steve Slater
LONDON, May 30 (Reuters) - Britain's finance ministrymistakenly released potentially market-moving information onFriday and blamed a website error for erroneously saying itplanned to sell 4 billion pounds ($6.7 billion) of shares inLloyds Banking Group.
The government is not planning to sell the shares, and therelease was "completely erroneous", a Treasury spokesman said."The Treasury is urgently looking into why this happened," hesaid.
People familiar with the matter said investors should notread anything into the release, which was received by newsorganisations, about any plans by the government to sell more ofits stake in Lloyds soon.
Such information is highly market sensitive and if reportedcould have caused Lloyds shares to fall. Lloyds shares brieflydipped in the minutes following the email release at 1359 GMT,but recovered to close up 0.4 percent at 77.75 pence.
Britain still owns a quarter of Lloyds, after selling twoblocks of shares in the bank in September and March. The stakeis held by UK Financial Investments (UKFI).
An email, headlined "Press release: UKFI announces itsintention to dispose of approximately 7.5% of Lloyds BankingGroup plc (test)", was sent to people who had signed up forautomatic releases on the gov.uk website, a site for governmentinformation.
The emails, triggered when a document was mistakenlyuploaded to the website, carried a link to a statement on thesite which said UKFI planned to sell 5.35 billion shares by aplacing to institutional investors. The page was later deleted.
The headline and statement were in fact repeats of a pressrelease sent out on March 25 but they had Friday's date on them.Friday's versions also had "(test)" on them.
At least two reporters at Reuters received the release, andother news organisations also received it.
Lloyds shares fell 4 percent on March 26 after Britain sold5.6 billion shares, worth 4.2 billion pounds.
Under the terms of that sale, UKFI agreed not to sell anymore until June 23, although such lock-up agreements can bewaived.
The timing of the next government stake sale in Lloyds isunder close scrutiny. The shares are above the level of the lastsale and the government is expected to sell more shares thisyear, possibly including an offer to retail investors.
UKFI said it was not selling any Lloyds shares and the oldUKFI press release was published in error "following routinewebsite testing" on the gov.uk website. "We are conducting anurgent review into how this happened to make sure this does nothappen again," it added in a statement.
Lloyds declined to comment.
($1 = 0.5982 British Pounds) (Editing by Pravin Char and Erica Billingham)
