WRAPUP 2-Vedanta issues $1.25 bln convertible, ups iron ore

* Bond proceeds to finance takeovers, boost stakes in units

* Sesa Goa iron ore unit buys assets, to boost output

* Sesa Goa shares jump 12 pct, Vedanta stock falls 6.1 pct (Adds details of bond issue)

By Ruchira Singh and Eric Onstad

MUMBAI/LONDON, June 12 (Reuters) - India-focused mining group Vedanta Resources Plc (VED.L: Quote, Profile, Research) launched a $1.25 billion convertible bond on Friday and its iron ore unit unveiled plans to boost output by more than half, helped by a takeover.

Shares in London-listed Vedanta closed 6.1 percent lower at 1,639.74 pence, making it the biggest loser in the FTSE 100 index due to expected dilution from the issue and as investors sold holdings to raise funds to invest in the bond.

The group's Mumbai-listed Sesa Goa unit (SESA.BO: Quote, Profile, Research) rose as much as 12 percent, the highest in a year, with the iron ore producer saying output would jump after it bought the mining assets of the Dempo Group for 17.5 billion rupees ($368 million). [ID:nBOM345267]

The size of Vedanta's offering has been increased to $1.25 billion, from the announced size of $1 billion, under an option with sole bookrunner JP Morgan, at a conversion price of $36.48.

The offering will be used to help finance takeovers and to boost stakes in subsidiaries.