WASHINGTON—The Treasury Department said it would generate $7.6 billion in proceeds from its sale of American International Group Inc.shares, as it sells nearly all its remaining holdings in the insurer it helped rescue at the height of the financial crisis.

The government said Tuesday it would sell about 234 million common shares at $32.50 each, matching the price it got when it sold an even larger slug of shares in September. AIG's stock closed Monday at $33.36, and jumped 1.6% to $33.90 in heavy pre-market trading Tuesday.

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