* Offer over 80 percent covered with two days to go - source
* Institutional demand remains weak - source
* Sources hope for institutional backing in last 48 hours
(Updates subscription percentage, adds source)
By Kylie MacLellan and Stephen Jewkes
LONDON/MILAN, Oct 27 (Reuters) - Europe's biggest listing in three years is over 80 percent covered, a source said Wednesday, as speculation mounts Italian utility Enel might price the sale of its green unit at the bottom of the range, or cut it further.
Enel, Europe's most-indebted utility, hopes to raise at least 3 billion euros ($4.2 billion) from the initial public offering (IPO) of up to 32.5 percent of renewable energy unit Enel Green Power, to cut debt and protect its credit rating.
But books on the offer, due to close on Friday, have yet to be fully subscribed, four sources close to the deal told Reuters, triggering talk among some analysts that the company might be heading for its second price cut in two weeks.
"It's over 80 percent subscribed," a source close to the matter said late on Wednesday.
Earlier in the day three sources said the book was 75 percent covered.
"It's very negative. I've been involved in other IPOs and three days before the end they were more advanced than this," said one analyst, speaking on condition of anonymity.
"It's true we're in volatile markets and I suppose a lot of people are waiting to the last minute. But I think it's likely Enel will cut the price and go below 1.8 euros."
Enel plans to sell 1.415 billion EGP shares in the base offer and up to 1.627 billion shares if a greenshoe option is exercised. Enel CEO Fulvio Conti has said the group will not sell if market conditions are not right.
On Tuesday, sources told Reuters that the offering, which has been marketed to institutional investors for 10 days, was struggling to draw interest because the price range of 1.8 to 2.1 euros per share was considered unappetising.
"They may be able to get the IPO done at the bottom end of the range, but I still think it is going to be cut," said MF Global utilities analyst Ashley Thomas, adding a fair-value range would be 1.7 to 1.9 euros per share.
"I understand they are saying institutional investors can put in their allocations at the last minute," he added. "I am sure that happens, but it would be much more comfortable to have it covered in advance of the deadline."
LAST-MINUTE RUSH
Other companies have managed to get IPOs away in a resurgent market for European offerings as equity markets rebound.
Many sales, including those of internet betting exchange Betfair and Norwegian oil company Statoil, have even been priced towards the upper end of their guidance ranges.
In contrast, Enel cut the price range for its EGP float from a preliminary range of 1.9 to 2.4 euros after investors clamoured for a price cut.
Sources close to the deal insisted on Wednesday there were no plans to lower the price further.
"Retail demand is strong out of Italy, that is a significant part of the book so far," one source said. "It is quite normal for institutions to come in over the last 48 hours."
A different banking source said: "The 75 percent cover of the global offer dates from Tuesday night and is a positive sign the IPO will close without problems."
Enel declined to comment.
Book-building, which started on Oct. 18, is scheduled to end this week. The final price is expected early next week.
Selling EPG shares at the top end of the range would value it just about in line with peers, with an enterprise value of just over 10 times core earnings, Thomson Reuters data show.
At 1.8 euros a share, EPG's enterprise value -- the value of its shares plus its net debt -- would drop to 9 times EBITDA, well below its peers. ($1=.7166 Euro) (Additional reporting by Giselda Vagnoni in Rome and Gianluca Semeraro in Milan; Editing by Jon Loades-Carter and David Hulmes)