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* Offer priced at $33.25 per GDS, at lower end of range
* Total size of the offering is $879 mln
* Free float to rise to 16.4 pct
* Bankers see chance of further Russian deals in 2017 (Adds fund manager comments)
By Polina Devitt and Diana Asonova
MOSCOW, June 30 (Reuters) - Russia's largest gold producer, Polyus sold $879 million worth of shares in Moscow and London, it said on Friday, a sale that analysts said showed a high level of western investor appetite for Russian assets.
Polyus, controlled by the family of Russian tycoon Suleiman Kerimov, delisted from the London Stock Exchange in 2015 after Western sanctions over Moscow's role in the Ukraine crisis began to bite for Russian companies.
It returns to London buoyed by an 8 percent rise in global gold prices this year.
British investors bought about half of the shares, VTB Capital, a bookrunner on the deal, said in a statement. The share of investors from North America totalled around 20 percent.
The sale of 9 percent of the company's shares follows a separate $887 million sale of 10 percent to a Chinese consortium led by Fosun International.
The offer price was set at $33.25 per global depositary receipt (GDS), corresponding to a price of $66.50 per ordinary share, at the lower end of a previously announced range.
Half of the proceeds from the deal went to Polyus and will be used for general corporate purposes, Chief Executive Pavel Grachev told an event at the Moscow Exchange. The other half went to the Kerimov family.
Appetite for Russian assets has been strengthening since the start of this year, driven by a rising oil price and expectations that U.S. President Donald Trump would ease fraught U.S.-Russian relations.
"We see sufficient interest towards the Russian risk and equity in general from foreign institutional investors," Kvasov told the Moscow Exchange event. "I hope that this deal will not be the last one this year. We see a window for further potential placements this year."
Colin Croft, fund manager at Jupiter Fund Management, said the sale showed there was still good demand for Russian assets.
"Despite all of the on-going geopolitical concerns – all the worries about Trump and sanctions and so on - they still managed to get it out the door," he said. "It was a pretty sizeable deal so that shows that Russia is still open for business.”
Anton Malkov, head of equity capital markets at Sberbank CIB, said further Russian deals were possible in the market in the autumn if oil markets and geopolitics remained calm.
Market optimism has been tempered in the past few weeks, with Trump embroiled in a row at home over his associates' ties to Russia, and the United States imposing a fresh round of sanctions on some Russian entities.
However, Polyus is a pure producer of gold, considered a safe haven during times of political and financial uncertainty.
Russian, European and Middle Eastern investors each took about 10 percent of the offering, Boris Kvasov, the head of equity capital markets at VTB Capital, said. The $879 million includes an over-allotment option, the sale was worth $799 million excluding it.
Long-term investors, including sovereign funds, took about 80 percent of the allocation. Russian pension funds took less than 1 percent, Kvasov said.
"The quality of investors, not only the fact of the placement itself, was important to Polyus," Grachev said.
A consortium formed of the Russian Direct Investment Fund (RDIF) with Middle-Eastern Sovereign Wealth Funds participated in the deal. It included investors from the UAE, Qatar, Kuwait and Bahrain. (Reporting by Polina Devitt, Diana Asonova and Olga Popova in Moscow, Simon Jessop in London; Editing by Jack Stubbs and Robin Pomeroy)