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Lehman Survives Another Round of Sale Rumors

By Charles Gasparino, CNBC On-Air Editor
Tuesday, 1 Jul 2008 | 8:26 AM ET

Lehman Brothers has fought off yet another spate of rumors about its condition, the latest being the investment bank was set for a fire sale similar to the one that hit Bear Stearns.

Shares of Lehman tumbled 8 percent Monday following market buzz that the company was going to have to sell. But Lehman gained after the bell when Morgan Stanley recommended investors buy Lehman shares and set a price target of $31, well above the $19.81 level the stock closed at in Monday trading.

Lehman CEO Dick Fuld was expected to remain independent regarding a possible sale unless short-sellers moved in and started pushing the stock price lower, as what happened Monday, sources told CNBC. These sources say Fuld's preference is instead to sell a chunk of the firm--perhaps a 20 percent to 30 percent piece to private equity firm Blackstone. (Video: See Charlie Gasparino discuss this report here).

But if shares continue to fall, Fuld may not have a choice to strike a deal with a bank that has a stronger balance sheet. Sources say Barclays is one such institution that could qualify.

If Lehman shares continue to fall, a sale would become more likely. Shares edged higher in premarket trade Tuesday.

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