* Profits beat forecasts
* Net interest income better than feared despite deposit war
* Share price falls on fears of government stake sale
(Adds comment by Treasury ministry's spokesman)
By Adrian Krajewski and Marcin Goclowski
WARSAW, Aug 4 (Reuters) - Concerns the government will flood the market with shares in Pekao, Poland's largest bank by capitalisation, overshadowed stronger than expected results on Tuesday, sending the lender's shares lower.
Pekao posted a smaller than expected 26-percent drop in second-quarter net profit thanks to trading gains and better than feared net interest income despite being embroiled in a deposit war.
But a treasury ministry spokesman said for the first time that Poland, under pressure to plug a budget gap, hoped to float remaining government stakes in several privatised companies this year, including Pekao and telecoms group TPSA.
Later on Tuesday the spokesman said the ministry has begun gathering offers for the remaining stake at the bank.
"Today we've started book-building for our 4 percent stake at Pekao," Maciej Wewior told Reuters. "We want to see what the interest is (in the stake).
The government's 4 percent stake is worth some $520 million at current market prices.
"The share movement is caused by concerns of a considerable supply of shares and not because of the announced results," said a Warsaw-based analyst.
Pekao's shares fell 4.5 percent to 137.50 zlotys, while Warsaw's main index was down 1.2 percent.
The stock had gained as much as 10 percent last week.
Pekao, a unit of Italy's UniCredit, posted a second-quarter net profit of 613 million zlotys ($216 million), ahead of the 501 million zlotys average forecast seen in a Reuters poll of analysts. The result was boosted by 241 million zlotys in trading gains.
The bank has been a reluctant participant in a fight for deposits, offering high rates just as Poland's central bank brought its main rate to an all-time low.
As a result, Pekao's net interest income fell 18 percent, though the figure was better than analysts predicted.
Pekao, Poland's top lender to companies, took 153 million zlotys in bad loan provisions. (Writing by Chris Borowski; Editing by Greg Mahlich)