Lehman in talks to sell-sources; survival questioned

By Patrick M. Fitzgibbons

NEW YORK (Reuters) - Lehman Brothers Holdings Inc has put itself up for sale as its survival was called into question, and its shares tumbled about 42 percent.

Chief Executive Dick Fuld has stepped up his efforts to sell the whole firm, instead of just a piece of its business, sources familiar with the situation said on Thursday. Bank of America Corp is said to be one possible suitor, according to the Wall Street Journal.

Bank of America and Lehman declined to comment.

Struggling to cover losses from toxic real estate investments, the investment bank rushed to raise desperately needed cash in a plan broadly outlined by Fuld on Wednesday.

Still, investors remained gloomy as the steady stream of grim tidings and the dearth of information from the company stoked fears that some of Lehman's clients and trading partners might take their business to more stable firms.

"Although many investors thought it would be avoided, customers of Lehman Brothers are becoming more and more skittish in their dealings with them," said William Lefkowitz, options strategist at vFinance Investments, a brokerage firm in New York. "If this fear continues to grow, that could lead to the demise of Lehman Brothers,"

Six months since the collapse and eventual fire-sale purchase of investment bank Bear Stearns, confidence in the Wall Street business model has faded.

The stock closed down $3.03 to $4.22 Thursday after falling as low as $3.80 earlier in the day. They have lost more than three-quarters of their value since Monday and more than 90 percent from their 52-week high of $67.73 last November.