How can I reduce the line spacing in a listing?

To reduce the space between lines, you can invoke \linespread{<x>} in the value passed to the basicstyle key, where <x> is a number smaller than 1, as in this answer by egreg. Don't abuse it, though.

\documentclass{article}
\usepackage{fontspec}
\usepackage{listings}
\newfontfamily\listingsfont[Scale=.7]{Menlo}

\lstset{frame=single}

\begin{document}

\begin{lstlisting}[basicstyle=\listingsfont]
/* Hello World program */
#include<stdio.h>
main()
{
    printf("Hello World");
}
\end{lstlisting}

\begin{lstlisting}[basicstyle=\linespread{0.8}\listingsfont]
/* Hello World program */
#include<stdio.h>
main()
{
    printf("Hello World");
}
\end{lstlisting}

\end{document}

To reduce the line spacing for all lstlistings, just set

basicstyle=\linespread{0.8}

in your \lstset{} configuration. No need to use fontspec.