By Dan Wilchins

NEW YORK (Reuters) - Lehman Brothers LEH.N shares fell 4.3 percent on Thursday after a newspaper reported the bank had tried to sell a stake of itself to South Korean or Chinese parties and failed, and a Citigroup analyst reduced his estimates for the sector.

Lehman's share decline came amid a broader drop in financial stocks after oil prices rose and investors' concerns about write-downs

mounted.

Citigroup analyst Prashant Bhatia cut his estimate for Lehman's third-quarter results to a loss of $3.25 per share from his prior estimate of a loss of 41 cents per share. He said he expects $2.9 billion (1.54 billion pounds) of asset-related write-downs for the bank.

Bhatia also cut his estimates for Goldman Sachs Group (GS.N: Quote, Profile, Research), Merrill Lynch MER.N, and Morgan Stanley (MS.N: Quote, Profile, Research), citing expected losses on hard-to-sell assets and lower client trading volumes.

Lehman Brothers, the fourth-largest U.S. investment bank, has taken a roughly $7 billion hit from credit-related write-downs and losses since the start of the global crisis. The bank's shares trade at less than half their book value of about $32.95, signalling that investors see more write-downs coming.

People close to the matter said this week that Lehman is considering selling at least a part of its asset management business.

The Financial Times said late Wednesday that Lehman's talks with China's biggest brokerage, CITIC Securities (600030.SS: Quote, Profile, Research), and state-owned Korea Development Bank (KDB) KDB.UL on a sale of up to half its shares had failed. The newspaper cited people in New York familiar with the potential buyers.