UPDATE 1-Assured Guaranty up after Ross backup funding ruled out

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June 19 (Reuters) - Shares of Assured Guaranty Ltd (AGO.N: Quote, Profile, Research) rose as much as 5 percent on heavy volumes Friday, a day after the bond insurer said it would not need backup funds from investor Wilbur Ross for a pending acquisition upon completion of its share offering.

New York-based private equity firm WL Ross & Co LLC, controlled by activist investor Wilbur Ross, had earlier offered to provide $361 million to fund the cash portion of Assured's acquisition of Financial Security Assurance Holdings Ltd (FSA).

Wilbur Ross, who made a fortune snapping up distressed companies and has a stake in Assured Guaranty, holds investments in a wide range of sectors from low-cost Indian airline SpiceJet Ltd (SPJT.BO: Quote, Profile, Research) to Assured Guaranty.

Belgian-French financial group Dexia (DEXI.BR: Quote, Profile, Research) (DEXI.PA: Quote, Profile, Research) said in November that it would sell its troubled U.S. bond insurance subsidiary FSA to U.S. peer Assured Guaranty for $361 million in cash and 44.6 million new Assured shares, making for a total consideration of $722 million at that time.

Assured Guaranty and the world's largest municipal lender Dexia said earlier this month they expected to close the sale of FSA on July 1, and Assured had the option to reduce, by up to half, the number of shares in exchange for cash at a price of $8.10 per share.

Assured Guaranty, a Bermuda-based provider of credit-enhancement products, expects to raise about $573.5 million through an offering of stock and notes, of which $364 million would be used to fund the cash portion of FSA deal.

Assured Guaranty said on late Thursday its offering of 38.5 million shares was priced at $11 apiece, with an estimated net proceeds of $423.5 million, up from its prior expectations of $400 million. Shares of the company were up 24 cents at $11.33 in afternoon trade on the New York Stock Exchange. More than 6.6 million shares changed hands by 1750 GMT, significantly higher than the stock's 50-day moving average volume of 4.1 million shares. (Reporting by Anurag Kotoky in Bangalore; Editing by Himani Sarkar and Gopakumar Warrier)