JPMorgan sells 5.4 bln pound shares

By Elinor Comlay and Laura Myers

NEW YORK/SEATTLE (Reuters) - JPMorgan Chase & Co (JPM.N) capped off its purchase of Washington Mutual Inc WM.N on Friday by selling $10 billion (5.4 billion pounds) of stock, more than it expected, while analysts warned the company faces a third-quarter loss.

The $1.9 billion acquisition of WaMu makes JPMorgan the second-largest U.S. bank by deposits and marks the largest bank failure in U.S. history. It also saddles JPMorgan with the troublesome mortgages that caused painful write-downs and credit losses for the thrift.

"It's too early to know if JPMorgan is a big winner or loser from this deal," said James Ellman, portfolio manager at hedge fund Seacliff Capital.

Investors gave the deal an early vote of confidence, though, sending JPMorgan shares up more than 10 percent.

"They basically bought the company for nothing," said John Stein, co-founder of investment firm FSI Group. Stein added that, if JPMorgan's assumptions about WaMu's holdings are right, "It's a great deal."

Jamie Dimon, JPMorgan's hard-charging chief executive, sees the deal as a boost to the empire he has been building since he arrived from Banc One four years ago.

"We're building this franchise for the long term -- not for next year or the next five years, but for the next 100 years," he said on a call with investors.

Dimon had considered buying WaMu at various points this year. By holding out for a deal in which JPMorgan snared WaMu's banking assets, while leaving behind about $20 billion in debt, his reputation as a savvy deal maker looks set.