* MPS foundation sold 2.5 percent through block sales
* Foundation is selling up to 15.5 pct in bank
* Still negotiating deadline extension with creditors
MILAN, March 14 (Reuters) - The controlling shareholder in Banca Monte dei Paschi di Siena said on Wednesday it has begun selling a portion of its 49 percent stake in Italy's third biggest lender as it raises money to repay creditors.
It said it had sold a 2.52 percent holding in the Tuscan bank through off-the-market block sales in the past four trading days "at the average market prices." It did not say how much it had raised from the sale.
A source close to the matter said the shares were sold to "families and entrepreneurs" without giving details or names.
The Monte dei Paschi foundation is being forced to sell a stake of up to 15.5 percent in the eponymous bank, the world's oldest, to reimburse 1.1 billion euros of debt it owes to a group of foreign and domestic creditors.
The foundation is hoping to sell around 7 percent to a handful of friendly domestic businessmen, sources close to the negotiations have told Reuters. It is also in talks with two Italian private equity funds, Equinox and Clessidra.
However, one of the sources told Reuters late on Wednesday that if market conditions were right, it could sell more of its holding through further block trades.
The foundation also said in a statement it was in advanced talks to reach a deal with the 12 creditors, which include JP Morgan, Credit Suisse and Mediobanca , to extend a March 15 deadline for it to come up with a concrete debt-cutting plan.
Sources close to the matter said on Tuesday to Reuters the deadline is likely to be extended until April 30.
The foundation said in the statement the block sales were carried out on March 9, March 12, March 13 and on Wednesday.
For a story on the foundation and its links to the bank, please click on