NEW YORK (Reuters) - Lehman Brothers Holdings Inc's survival was called into question as its chief executive scrambled to sell assets to cover losses from toxic real estate investments, sending shares down as much as 46 percent.

The investment bank's need to raise desperately needed cash, broadly outlined by CEO Dick Fuld on Wednesday, failed to assuage investor concerns. The stock dropped $2.92, or 40 percent, to $4.33 yesterday after falling as low as $3.88.

The steady stream of grim tidings and the dearth of details from the company stoked fears that some of Lehman's clients and trading partners might take their business to more stable firms.

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

"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."

The shares 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. The crisis came on a difficult day for Lehman, the seventh anniversary of the September 11 attacks in New York that severely damaged its headquarters across the street from the World Trade Center.

"As much as they try to ... calm investors down, investors don't have yet the answers they need," said Rose Grant, managing director of Eastern Investment Advisors. "There's a complete lack of faith, lack of confidence and lack of trust."

Other financial stocks have also fallen sharply in the past week and continued to struggle Thursday. Merrill Lynch & Co Inc fell 13 percent to $20.34, insurer American International Group Inc slid 14 percent at $15.08 and Washington Mutual Inc dropped 10 percent to $2.08.

But Lehman — founded in 1850 by three German immigrants who traded cotton — garnered most of the market's attention.

The company reported a record quarterly loss of $3.9 billion on Wednesday, and said it would spin off distressed assets and sell a stake in its asset management business. But details about the size, scope and timing of the potential sales were few — leading to fresh fears about its plans.

A string of analysts — including JPMorgan, Wachovia, Goldman Sachs and Citigroup — widened loss estimates and cut Lehman's price targets yesterday.

"We thought getting news out of Lehman was going to clear the dark cloud, but it really doesn't. It just leaves us with a company that's limping along, that may or may not make it," said Arthur Hogan, chief market analyst at Jefferies & Co.

The company has written down billions of dollars in assets in the last year — largely holdings of complex mortgage-backed securities. And over the last several months, the bank has been battling rumours of defecting clients and talk of a takeover at a low price.

"It's unfortunate that we're in the kind of position now where events can take over. The stock is telling us that Dick Fuld is running out of options," said Michael Holland, founder, Holland & Co, which oversees more than $4 billion of investments. "Unfortunately for Fuld, who has been very adamant about keeping Lehman independent, he has to find a partner now, someone to acquire them."

One possible suitor, Goldman Sachs , is not looking to buy Lehman, sources familiar with the situation said, reflecting concerns that integrating two big investment banks would be too disruptive. There has been market speculation that larger rival Goldman would step in and acquire Lehman.

Lehman's survival may hinge on the sale of a 55-percent stake in Neuberger Berman, its asset management business. But not everyone is confident a deal will be consummated.

"We are not even sure that the auction process for 55 percent of their asset management group is going to work because the people that win the auction need to find the money to buy it," Hogan said.

Lehman's growing problems have led to questions about CEO Fuld and his strategy to get the firm on more solid footing.