* $1 bln settlement is with 3 of 5 investor groups

* Bank seeks settlement with remaining groups

* Shares rise more than 1 percent

(Adds analyst comment, details of claim)

By Andrew MacAskill and Kirstin Ridley

LONDON, Dec 5 (Reuters) - Royal Bank of Scotland RBS.L has agreed to pay 800 million pounds ($1 billion) over allegations it misled shareholders during a fundraising at the height of the financial crisis.

The state-controlled British bank said on Monday it had struck a deal with three of the five investor groups involved in the lawsuit. It is now trying to reach an agreement with the others in order to avoid a potentially embarrassing trial.

Thousands of retail investors have yet to agree to the split settlement, which adds a fresh dimension to an unprecedented English lawsuit that stands out for its size and complexity.

The investors allege RBS failed to give them a proper picture of its finances during a 2008 fundraising.

They lost most of their money when RBS nearly collapsed a few months later and had to be bailed out by the British government, costing taxpayers more than 45 billion pounds.

Monday's deal includes a settlement with Standard Life, Legal & General, Aviva and Prudential and the Universities Superannuation Scheme (USS), which together bought about 10 percent of the 2008 share issue.


RBS is attempting to settle a range of fines and lawsuits related to its alleged misconduct before and during the financial crisis, which have hindered its plans to return to profit and private ownership.

Last week, the bank was the biggest failure in the Bank of England's annual stress test of lenders, partly because of a mounting legal bill for misconduct that analysts and lawyers had previously estimated could cost the bank up to $27 billion..

Although RBS has set aside an unprecedented amount to cover an out-of-court settlement for a case involving allegations of misrepresentation, it represents a good deal for the bank, according to Ian Gordon, an analyst at Investec.

"If it leads to a settlement with all the parties I would characterise that with a sense of relief," he said.

Chief Executive Ross McEwan welcomed the partial settlement as a sign RBS is a drawing a line under its troubled past and said he hoped the remaining groups would accept the offer.

RBS shares were up 1.1 percent to 195.5 pence at 1118 GMT.

The deal moves the bank closer to avoiding a lengthy trial scheduled for March next year that could force its former executives to take to the stand to discuss the darkest period in the bank's almost three-century history.

Reuters previously reported that RBS ignored warnings from senior advisers about estimated losses that would be reported in the prospectus for its rights issue in order to portray the bank in a falsely healthy light.

The bank also avoided repricing billions of dollars of souring investments on the eve of the 2008 financial crisis for fear of endangering bonu ($1 = 0.7857 pounds)

(Additional reporting by Sophie Sassard; Editing by Mark Potter and Alexander Smith) ((sophie.sassard@thomsonreuters.com; +44 207 542 2334;))