* Russians to sell stake soon to pay $1.7 bln fine
* Stake would be transferred to stock exchange for auction
* Telenor says proposed transaction 'outrageous'
* Telenor shares down 4.3 percent
(Adds Telenor comments, share price)
MOSCOW, June 8 (Reuters) - Russian bailiffs threatened an imminent sale of Telenor's stake in mobile firm Vimpelcom to cover a 1.7 billion fine, RIA news agency said on Monday, ratcheting up pressure on the Norwegian company.
Shares in Telenor, which reacted with outrage at the prospect of a transaction it said would be based on a flawed court verdict, fell following the report.
"(The stake) will be handed over shortly to be auctioned off ... on the stock market, which will ensure maximum transparency of the sale process," RIA quoted a spokeswoman for the federal bailiff service as saying.
Telenor has been locked in an ownership conflict with Vimpelcom's co-owner, Russia's Alfa Group, for five years.
Analysts view the $1.7 billion fine, imposed by a Siberian court which also impounded the Norwegian firm's Vimpelcom holding, as a manoeuvre linked to high-stakes talks between the two companies.
The suit that led to the fine was brought by Farimex, a tiny Vimpelcom shareholder that alleged Telenor had hindered the Russian carrier's progress in Ukraine. Alfa has repeatedly denied claims it has corporate links with Farimex.
No one at the bailiffs' office was immediately available for comment.
"The enforcement of the claim of $1.72 billion is based on an incorrect court decision that has no merit and should not take place," the head of Telenor's Central and East European operations, Jan Edvard Thygesen, said in a statement.
"We expect that the bailiff will halt any plans of a sale or auction until the claim has been heard by all necessary court instances."
It added that it was confident that the decision of the court in Omsk, which Telenor appealed against, "will eventually be overturned."
"It would therefore be outrageous if the bailiff's office (went) ahead with a sale now," Thygesen said.
Analysts expect the two sides eventually to split their mobile holdings in Russia and Ukraine, where they also have joint ownership of local operator Kyivstar, though Alfa has proposed they pool their mobile holdings in a single company.
Telenor shares traded down 4.3 percent at 50.80 crowns on the Oslo bourse by 1301 GMT, underperforming a 1.8 percent drop in the bourse's benchmark index.
(Additional reporting by John Acher in Oslo)
(Reporting by Maria Kiselyova; writing by Melissa Akin, editing by Will Waterman, John Stonestreet)