Washington Mutual near $5 bln TPG deal - sources

By Megan Davies and Jonathan Stempel

NEW YORK (Reuters) - Washington Mutual Inc (WM.N: Quote, Profile, Research, Stock Buzz), the largest U.S. savings and loan, is close to obtaining a $5 billion injection from investors led by private equity firm TPG Inc, people familiar with the situation said on Monday.

An investment would ease the thrift's need for capital as losses have soared from subprime mortgages and other loans.

A transaction could be announced Monday or Tuesday, said the people, who declined to be named because they were not authorized to speak.

Shares of Washington Mutual were up $2.89, or 28.4 percent, to $13.06 in late afternoon trading on the New York Stock Exchange. Financial stock indexes also outperformed stocks in general.

An investment could dilute holdings of existing shareholders but could also provide stability for WaMu, as the thrift calls itself.

Meanwhile, some investors who had "shorted" the thrift's shares may have bought the stock to cover their bets on a decline, contributing to Monday's gains.

TPG and WaMu declined to comment.

Seattle-based WaMu would join more than a dozen commercial and investment banks seeking cash from outside investors in the last year, after more than $200 billion of write-downs and credit losses tied to the nation's housing and credit crisis.