Toy seller plans listing as investors turn more bullish on Russia

* Detsky Mir is Russia's largest children's goods retailer

* First IPO since 2014 by Russian retail firm

* Investors more upbeat after economic stabilisation

* Plan to offer around 30 pct of shares - sources (Writes through with new context, detail)

By Olga Popova and Alexander Winning

MOSCOW, Jan 16 (Reuters) - Children's goods retailer Detsky Mir is planning an initial public offering in Moscow, hoping to cash in on an improved appetite for investing in Russia after a recovery in oil prices and signs that the country's economy is stabilising.

Detsky Mir had looked into a stock market listing as early as 2013 but those plans were derailed by Western sanctions over the Ukraine crisis which prompted investors to shun Russian assets.

Russian stocks and the rouble are now back in favour, rallying strongly on a deal by global oil producers to cut output and on hopes U.S. President-elect Donald Trump will ease sanctions on Moscow.

Detsky Mir's having the confidence to come to market is a positive sign for deal-starved investment bankers in Russia, which has been frozen out of international capital markets for several years. There were only a handful of Russian IPOs in 2016.

The IPO would be the first by a Russian retailer since hypermarket chain Lenta (Frankfurt: A1XEVQ - news) sold shares in London in 2014.

Natalya Kolupaeva, an equity analyst at Raiffeisen in Moscow, said she expected the Detsky Mir deal to be successful as the company was performing well and the economic backdrop was improving.

"It will send a good signal to the Russian retail market," she said.

Other Russian firms that could list shares in 2017 include shipping firm Sovcomflot, in which the Russian government plans to sell a stake, and En+ Group, a holding company for Russian tycoon Oleg Deripaska's assets, sources have told Reuters.

Detsky Mir operates over 500 stores in Russia and Kazakhstan and sells products including toys, clothes and sports equipment for children.

It is 72.6 percent owned by conglomerate Sistema, with another 23.1 percent controlled by the Russia-China Investment Fund and some shares split between the management of Sistema and Detsky Mir.

Detsky Mir said on Monday it planned to offer secondary shares, which will be sold by Sistema, the Russia-China Investment Fund, and certain members of Sistema's and Detsky Mir's management.

Sistema intends to retain majority ownership in the retailer in the medium term, Detsky Mir said, without providing a time for the share sale or the number of shares on offer.

Two sources close to the deal told Reuters Detsky Mir's shareholders planned to offer around 30 percent of its shares but did not give a breakdown of how much each seller would offer.

Detsky Mir has increased its revenue by an average of 30 percent a year in the past three years and paid record dividends in 2015.

A recent rally in the rouble should help to support profitability as it sells many imported goods, while analysts say government largesse in the run up to next year's presidential election should help consumer demand to recover.

Those factors should contribute to a more favourable outlook for Russian retail stocks, which had a mixed performance in 2016. Russian food retailer Magnit's revenue growth slowed last year but X5 Retail Group has been reporting sales growth in excess of 20 percent.

Detsky Mir was valued at 42.2 billion roubles ($708.86 million) in 2015 when Sistema sold a 23.1 percent stake to the Russia-China Investment Fund.

Credit Suisse (IOB: 0QP5.IL - news) , Goldman Sachs (NYSE: GS-PB - news) , Morgan Stanley (Xetra: 885836 - news) , Sberbank CIB and UBS (LSE: 0QNR.L - news) are arranging its IPO.

(Additional reporting by Polina Devitt, Katya Golubkova and Maria Kiselyova; Writing by Alexander Winning and Katya Golubkova; Editing by Louise Heavens and Jane Merriman)