LONDON, Dec 20 - GlaxoSmithKline has agreed to sell a clutch of North American non-prescription drugs for 426 million pounds to Prestige Brands Holdings, and remains in talks regarding the sale of similar European assets.

Britain's biggest drugmaker said on Tuesday the sale of the over-the-counter (OTC) brands to Prestige would generate cash proceeds of 242 million pounds, which it will return to shareholders in 2012.

GSK first announced in February that it planned to sell non-core brands representing about 10 percent of its consumer health portfolio, and had hoped to divest them as a single block.

But markets have been difficult, given broader financial uncertainties, prompting it to look at piecemeal options as well in a long-running auction run by Goldman Sachs.

Analysts initially said all the OTC products together might raise between 1.5 billion and 2 billion pounds, or three to four times annual sales.

In the event, the North American assets sold to Prestige fetched 3.2 times their 2010 sales of 134 million pounds -- but it remains to be seen if the other brands, with combined sales of some 400 million pounds, will get such a high price.

In particular, there are doubts about the willingness of buyers to take on diet pill Alli, which is the biggest single brand included in the mix. Alli was not included in the sale to Prestige.

Alli, which is a low-dose version of Roche's prescription drug Xenical, has been linked to rare cases of liver injury, raising the possibility of legal issues.

Active discussions continue with other potential buyers for the remaining assets, Chief Financial Officer Simon Dingemans said in a statement.

The company gave no timescale for the disposal of the other OTC products and did not identify other parties that might bid.

Industry sources previously told Reuters that private equity group Bain Capital was looking at the assets, along with Blackstone, which at one stage had linked in a joint bid with Prestige. More recently, however, Blackstone lost interest in the joint approach with Prestige, sources said.

Trade players including German groups Bayer, Sanofi and Boehringer Ingelheim have also shown interest in specific parts of the portfolio.

Brian White, an industry analyst at Shore Capital, said GSK had managed to get a respectable price from Prestige that was in line with his forecasts, underscoring solid demand for OTC remedies, which tend to sell well even in tough economic times.

Most people recognise consumer health assets are quite attractive, he said.

GSK said it expected to complete the sale of brands to Prestige -- including painkillers like BC and Goody's, as well as Beano, Ecotrin, Fiber Choice and Tagamet -- in the first half of next year.

Despite the divestment, consumer healthcare will still remain a priority area for GSK. The company aims to focus its portfolio on top brands in Western markets and concentrate heavily on fast-growing opportunities in emerging markets.

Shares in GSK traded down 0.8 percent by 1515 GMT, lagging Britain's blue-chip index which up 0.7 percent, while Prestige gained 16 percent.

(Additional reporting by Sarah Young; Editing by Ben Hirschler)