Aug. 16 (Bloomberg) -- Bear Stearns Cos. shares surged the most since October 1998 amid speculation the nation's fifth- biggest securities firm may raise money from an outside investor.

``If the firm is successful in bringing in a `deep pocket' partner, it will stop all rumors concerning potentially more adverse results,'' Punk Ziegel & Co. analyst Richard Bove wrote in a note to investors. On July 18, he advised selling Bear Stearns and its rivals, before brokerages plunged 18 percent.

Bove said New York-based Bear Stearns may sell as much as a 20 percent stake, possibly to a Chinese bank. The company is in talks to sell a minority stake to China's Citic Group, Forbes Magazine reported on Aug. 9, citing a person close to the Beijing-based company.

Bear Stearns surged $13.29, or 13 percent, to $116.44 at 4 p.m. in New York Stock Exchange composite trading. The shares have lost 28 percent this year.

``There are rumors around that there is rescue financing coming in for some of the financials, particularly for Bear Stearns,'' Barton Biggs, a former Morgan Stanley strategist who now runs the $1.5 billion hedge fund Traxis Partners LLC, said in an interview.

Voicemail and e-mail messages left for Monica Orbe, a Bear Stearns spokeswoman, weren't immediately returned.

The Amex Securities Broker/Dealer Index has declined 18 percent since Bove recommended selling shares of Bear Stearns, Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Morgan Stanley.

To contact the reporter on this story: Allen Wan in New York at awan3@bloomberg.net.

Last Updated: August 16, 2007 17:25 EDT