CORRECTED: Barclays talks to CVC on iShares sale - source

By Steve Slater

LONDON (Reuters) - BARCLAYS (BARC.LO) has entered exclusive talks with CVC Partners over the sale of its iShares unit for an estimated 3 billion pounds ($4.29 billion), a source familiar with the situation said on Tuesday.

The sale would not include the securities lending business of San Francisco-based Barclays Global Investors (BGI), the parent of iShares, the source also said.

The bank declined to comment.

Barclays shares quickly gave up gains after the Reuters story, hitting levels around 151 pence, down from 155 pence before the news. They were last seen at 154.2 pence, for a 3.4 percent gain.

Barclays would retain a roughly 20 percent exposure to iShares through warrants, the source also said.

Barclay's, which on Monday rejected an offer to take part in a British government plan to insure risky assets, had earlier said talks about the sale of the exchange-traded funds unit were "progressing well."

Analysts had put the value of iShares at about 3 billion pounds, though bank industry sources had said bidders could be willing to bid near 4 billion pounds.

It was not immediately clear whether CVC was bidding alone, or whether it was part of a consortium. The private equity house could not immediately be reached for comment.

Goldman Sachs had earlier been mooted as a potential bidder, as were Bain Capital and a consortium of Hellman & Friemand and Apax Partners .

The source could not be more specific about the precise timing of the deal, as details were being hammered out.

($1=.6993 Pound)

(Writing by Douwe Miedema; Editing by Erica Billingham)