* Shares up 35 pct as investor fights capital increase
* Aryzta reports 470 mln euro FY loss
* CEO says firm has stabilised after 'unfocused strategy' (Adds comment from biggest shareholder)
By John Miller and Oliver Hirt
ZURICH, Oct 1 (Reuters) - McDonald's hamburger buns maker Aryzta's plan to raise 800 million euros ($928.48 million) in new capital is excessive, the company's biggest shareholder said on Monday, adding it would present less-dilutive alternatives soon.
Aryzta's stock jumped as much as 35 percent on hopes that the move by Cobas Asset Management, which has a stake of more than 14.5 percent, would force the Swiss-Irish bakery to take more modest steps as it seeks to cut debt and restore growth.
The shares were up 25 percent by 1211 GMT. They are down by two-thirds this year and more than 85 percent since 2014.
Aryzta, which also has Otis Spunkmeyer cookiesLa, Brea Bakery breads and Cucina Grande pizza, has been hit partly by rising costs in North America and weak consumer spending in some European markets, particularly in Britain after its Brexit vote.
Earlier this month Aryzta, which lost more than $1 billion in 2017, struck a deal with banks on a capital increase.
Cobas, which has been building up its Aryzta holding in recent months, said progress so far by new Chief Executive Kevin Toland had convinced it that less dramatic measures than the proposed 800 million euro capital increase were needed to get the company back on track.
"The company does not require such a highly dilutive capital increase," a Cobas spokesman said when asked for comment on the company's results.
"Principally we endorse the intention to strengthen the balance sheet. To that effect, we are reviewing alternatives that will improve upon the company's proposal."
Cobas, based in Spain, said it would present its plans to the board or call for an extraordinary general meeting.
Shareholders had been set to vote on Nov. 1 on the capital increase.
Aryzta reported a full-year loss of 470 million euros ($545.01 million) on Monday, hit again by distribution and labour costs. It made a 907 million euro loss a year earlier.
For its underlying business, Aryzta said it expected the current 2019 fiscal year to be "stable" as its cost-and-debt cutting programme called "Project Renew" takes hold.
Aryzta has revamped management after a turbulent year in which the company, among other challenges, was hit by raids on a Chicago bakery that employed undocumented workers and suffered from a failed spending spree that left it "overleveraged".
Earlier this summer, Switzerland's Larius Capital, a small shareholder, also began pushing Aryzta to sell more assets and reduce or even eliminate the capital increase.
Toland, who took up his job in May, has begun a debt-cutting drive, which includes plans to sell Aryzta's 49 percent stake in French frozen-food company Picard.
Net debt stood at 1.5 billion euros on July 31.
"Over a period of time, Aryzta's strategy became unfocused," Toland said on a call with reporters. "We have now stabilised the company and are moving to fix the balance sheet."
On the call, Toland declined to comment on any push among shareholders to trim the capital increase, citing company policy. An Aryzta spokeswoman could not immediately be reached for comment about Cobas's opposition to the capital hike. ($1 = 0.8624 euros) (Reporting by John Miller; Editing by Sunil Nair, Louise Heavens and Jane Merriman)