(Changes attribution to government source; Adds details from the report in paragraph 2; background in paragraphs 5-8)

Feb 27 (Reuters) -

British Finance Minister Jeremy Hunt has held talks with Shein's Executive Chairman Donald Tang and the Chinese-founded fast-fashion chain is keen to list in London, a UK government source told Reuters.

The initial public offering by Shein, which sells cheap fashion in more than 150 countries, could be the London Stock Exchange's second largest in history, Sky News, which first reported the talks, said citing a capital markets banker.

The LSE and Shein declined to comment, while Britain's finance ministry pointed to the reforms it had developed to boost the UK as a destination for IPOs.

"The government does not comment on individual companies - it is for individual firms to decide where to list," the ministry said.

A listing by Shein could be seen as a coup for Britain, which has struggled to attract IPOs and retain listed companies, fuelling concerns that London has lost its appeal, in part because of Brexit.

Some of the companies that have chosen U.S. listings include British chip designer Arm Holdings, which debuted on the Nasdaq in September.

Shein had

confidentially filed to go public

in the United States late last year, Reuters had reported citing two sources familiar with the matter. However, it is now also considering other options.

While the sources said the company has not determined the size of the deal or the valuation at IPO, Bloomberg reported it targeted up to $90 billion in the float. (Reporting by Elizabeth Piper in London and Eva Mathews in Bengaluru; Editing by Sonia Cheema, Shilpi Majumdar and Matt Scuffham)