The Treasury Department launched a sale of as much as $6 billion of American International Group Inc. stock, in a move that stands to further reduce the U.S. government's stake in the New York-based insurer more than three years after the company's government rescue during the financial crisis.

Bankers were discussing a price of $29 a share with investors on Wednesday evening, according to people familiar with the matter, who also said the offering is expected to be completed and priced by Thursday morning.

AIG,...