UPDATE 1-Process for AIG Asian IPO to start soon-sources

* AIG soon to start IPO process for Asian unit AIA-sources

* Sale of public shares could come early in 2010-CEO Liddy

* Liddy says leaning toward Hong Kong IPO

* IPO could raise in region of $4 billion

By Michael Flaherty and Lilla Zuill

HONG KONG/NEW YORK, May 13 (Reuters) - AIG is expected to soon begin the process of launching the initial public offering of its largest Asian subsidiary, according to sources familiar with the matter, in what could be one of the largest Asian IPOs to hit the market since early last year.

American International Assurance Co Ltd (AIA), the Hong-Kong based unit of American International Group Inc (AIG.N: Quote, Profile, Research), has more than $60 billion of assets under management and has said it will separate from its embattled parent.

AIG first tried to sell AIA in a private transaction for up to $20 billion last year but failed to find a buyer willing to pay a high enough price.

AIG has suggested it could initially sell up to 20 percent of AIA's market value in an initial public offering. On that basis, the size of AIA's public listing could raise up to $4 billion.