* UK regulator identifies 12.8 bln stg capital gap at bank
* Barclays plans 5.8 bln stg rights issue, sale of 2 blnCoCos
* Announces further 2 bln stg charge for mis-selling
* Says to fight UK watchdog findings on 2008 Qatar probe
* Shares close 5.7 percent lower (Adds comments from investors)
By Steve Slater and Matt Scuffham
LONDON, July 30 (Reuters) - Barclays is raising 5.8billion pounds ($8.9 billion) from its shareholders to help pluga larger-than-expected capital shortfall identified by Britain'sfinancial regulator at the bank.
The Bank of England's Prudential Regulation Authority (PRA)said on Tuesday Barclays needed an extra 12.8 billion pounds tostrengthen its capital reserves against potential market shocks.
That was higher than an estimate of about 7 billion a monthago, due mainly to tougher European rules on the way banksmeasure risks.
The PRA gave the 320-year-old bank a year to fill the gap,requiring it to turn to shareholders to speed up its plan torebuild capital.
"I think they've done the right thing. Anything else wouldhave been a fudge, they needed to get on and raise equity," saidMike Trippitt, analyst at Numis Securities.
Barclays, Britain's third-biggest bank and the sixth-largestin Europe, announced the fundraising alongside another 2 billionpound charge for mis-selling products and said it was alsopushing back a profitability target.
Banks across Europe are battling to meet tougher regulationsaimed at preventing a repeat of the financial crisis, and manyare also struggling to move on from past misdeeds. Deutsche Bank, for example, missed second-quarter profit forecastson Tuesday, hit by higher legal costs.
Barclays also continues to be haunted by a fundraising withQatari investors in 2008, which is being investigated by Britishand U.S. authorities. The bank said Britain's Financial ConductAuthority made preliminary findings against it on June 27, whichit is contesting.
Barclays Chief Executive Antony Jenkins said he was reacting"quickly and decisively" to the PRA's demands and the regulatorwas happy with his plan. It also includes selling 2 billionpounds of bonds that convert into equity or are wiped out if thebank hits trouble, and shrinking loans by a further 65-80billion pounds or more, notably in the investment bank.
"What we're doing today is all about certainty...it's aboutcertainty on capital, certainty on timing and certainty onconduct risk. That's what really matters to shareholders," saidJenkins, who took over last August.
Standard Life, one of the biggest investors in Barclays andthe UK stock market, criticised regulators for a "lack ofstability or consistency" in capital requirements.
The regulatory regime "appears both capricious and hostileto banks and is in consequence raising the cost of capital forthe banking sector," said David Cumming, head of equities atStandard Life Investments.
Another of the 20 largest investors in Barclays said thebank's strained relationship with its regulator in the past hadprobably not helped. "I do slightly wonder whether they arepaying the price for the hubris of the past," he said.
Rights issues cut earnings per share, and Barclays sharesclosed 5.7 percent lower at 290.3 pence, the weakest performancein the European bank index.
The rights issue, the biggest by a British bank since 2009,will offer shareholders one new share at 185 pence - 40 percentbelow Monday's closing price - for every four currently owned.
It will raise the equivalent of 15 percent of Barclays'market value and allow existing shareholders to buy discountedshares first, giving them a chance to maintain their stakes andavoiding the criticism that the 2008 fundraising was toogenerous to new investors.
Regulators are increasing scrutiny of leverage ratios, whichdo not rely on banks' own risk assessments but express a bank'scapital as a proportion of its overall assets.
Barclays said the PRA had estimated its leverage ratio at2.2 percent at the end of June, lower than the 2.5 percentestimated last month, and compared with the regulator's goal forbanks to have a ratio of at least 3 percent by June 2014.
MIS-SELLING
Barclays said it was pushing back its target to deliver areturn on equity above its cost of equity - previously 11.5percent - to 2016, a year later than Jenkins set out in afar-reaching restructuring unveiled in February.
But it bumped up its dividend payout expectations, saying itplanned to distribute 40-50 percent of earnings in 2014 comparedwith the 30 percent previously predicted.
Barclays set aside another 1.35 billion pounds to compensatecustomers mis-sold payment protection insurance (PPI), takingits total provision for that to 4 billion pounds.
British banks have now put aside more than 15 billion poundsto cover PPI compensation, and Barclays' latest move signalsrivals may have to bump up provisions too.
Barclays also set aside 650 million pounds more formis-selling complex interest rate hedging products to smallfirms.
The bank reported a pretax profit of 1.7 billion pounds forthe six months ended June, almost double its 871 million poundprofit a year ago. Its adjusted pretax profit was 3.6 billionpounds, just below the average forecast of 3.7 billion.
It was cautious on the outlook and operating environment andsaid it would speed up cost-cutting. The bank spent 640 millionpounds on restructuring in the first half.
Barclays will pay about 130 million pounds in fees andcommission on the underwritten rights issue. The offer will belaunched in September, and new shares are due to be issued onOct. 3.
($1 = 0.6515 British pounds) (Additional reporting by Chris Vellacott and Laura Noonan;Editing by Mark Potter and Erica Billingham)
Barclays (BARC)
