Bear Stearns Cos Inc shares jumped 4 percent on Wednesday on rumors the investment bank, which has faced hedge fund losses and asset write-downs, is close to selling a minority stake to another financial institution, traders said.

Its shares were up $4.53 to $118.77 in active trading on the New York Stock Exchange at noon on Wednesday. A spokesman for Bear Stearns declined to comment.

There are some rumors that a large Chinese bank might take a stake in Bear Stearns, said William Lefkowitz, options strategist at brokerage firm vFinance Investments in New York.

A trader who asked not to be named said he had heard HSBC Holdings was close to buying a stake. An HSBC spokesman in London declined to comment.

Bear has been in discussions with Chinese investors in the past, according to reports. Rumors that a deal was near lifted the investment bank's shares nearly 13 percent on August 16.

The investment bank posted a 61 percent drop in quarterly profit last week, but said it thought the worst was over.

In a telephone interview with Reuters after the earnings release, Bear Stearns Chief Financial Officer Sam Molinaro said the New York-based investment bank is always looking at potential joint ventures to expand the company's business. He declined to comment on the market speculation.

(Reporting by Dan Wilchins, Tim McLaughlin, and Jennifer Coogan in New York; Doris Frankel in Chicago; and Clara Ferreira-Marques in London)

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