INSTANT VIEW: Citigroup shares crash below $4, CDS widen

NEW YORK (Reuters) - Citigroup Inc shares plunged anew on Friday, breaking through the key level of $4 a share and reversing early gains on the news that the bank was mulling a variety of options to restore the bank's health.

Citi, down as much as 21 percent, was the biggest decliner among big banks, but other big banks were also under pressure. JPMorgan Chase & Co was as much as 12 percent lower.

In addition, the cost to protect Citigroup debt against default rose suggesting that fixed-income investors see increased risk. It cost $425,000 annually to protect $10 million of debt against default for five years, up from $395,000 annually on Thursday, according to Phoenix Partners Group.

The following is reaction from industry analysts and investors:

TIM GHRISKEY, CHIEF INVESTMENT OFFICER AT SOLARIS ASSET MANAGEMENT IN BEDFORD HILLS, NEW YORK

"It's fear that businesses and consumers will stop doing business with Citigroup. It's fear that they won't be a survivor and fear of possibly unknown off balance sheet items or exposures. This is an environment where it's a bit of a witchhunt and we have to have the next victim.

Whether it's the press, or short sellers, or day traders, or investors, (they're) looking for the next victim and making that happen. It's an environment where there is fear and it compounds on itself.

Financially, looking at what we know about Citigroup, its fundamentals and balance sheet, it's no worse than any other major integrated bank. It's fear of what we don't know, and Citi is exposed everywhere.

There's not a lot of 'real' trading going on. What we hear is it's basically day traders, including day traders short selling. They're the ones really whipping the market around."

JEOFF HALL, CHIEF U.S. ECONOMIST, THOMSONREUTERS IFR MARKETS IN BOSTON

"There are a lot of rumors swirling and fears of a potential fire sale. And what seems to be happening now is that potential suitors are not ready to buy but are waiting to see just how low the price can go."

WILLIAM BELLAMY, DIRECTOR OF FIXED INCOME WITH THOMPSON, SIEGEL & WALMSLEY IN RICHMOND, VIRGINIA

"I have a feeling the reason we saw such a rally in the 30-year Treasury bond yesterday was due to the problems at Citigroup."

"The uncertainty surrounding Citigroup is going to plague the markets until it is resolved."

DAVID DIETZE, CHIEF INVESTMENT OFFICER OF POINT VIEW FINANCIAL SERVICES IN SUMMIT, NJ

"Just a month ago the government was providing assistance for Citigroup to buy Wachovia....Now, they're struggling for their life. What happened in four to five weeks?"

"For Citi not to succeed calls into question whether any financial institution can succeed."

"I think the short sellers are testing the government here and saying we are going to keep pushing it down... I think they're really testing here in this interim lame-duck period what the government's will is...If everyone piles in I am not sure that Citi can survive completely on its own."

MATT MCCORMICK, PORTFOLIO MANAGER AND BANKING ANALYST AT BAHL & GAYNOR INVESTMENT COUNSEL IN CINCINNATI

"Investors are looking for stability. When Citi has a board meeting about being acquired, or making an acquisition, it creates uncertainty. Citi has been as battered as it can be. So if it good news out of board meeting, the stock can rally. People are hoping for actionable news from the meeting but people are not betting on it, they're giving up.

"People are asking how much money would Citi need if they had to go to the government?"

PAUL HARRIS, PORTFOLIO MANAGER AT AVENUE INVESTMENT MANAGEMENT IN TORONTO:

"The assets of the company are very good, breaking it up would be ridiculous. There are two choices: one is you sell the company into what is perceived to be stronger hands, or you go to the government and get a massive bailout."

"This is a great chance for Canadian companies to buy something like Citi. Royal Bank (of Canada) could buy Citi very easily. But I think Americans are adverse to letting this kind of organizations fall into foreign hands."

"The model that Citibank created is not broken. It's the model that they should have had in the United States for years. It works in every part of the world except the United States, where there are too many banks, and that's part of the problem."

NANCY BUSH, ANALYST NAB RESEARCH IN NEW JERSEY

"I think the Treasury is going to exert itself some time over the next few days. This just cannot go on."

"The view on Citi started to change after the failure to buy Wachovia."

"There's a crisis of confidence in the whole banking system but it centers on Citi."

"We need to get this thing out of the way. I think everybody feels at this point it's time to get on with life and get Citigroup out of the way."

GERARD CASSIDY, A VETERAN BANKING ANALYST FOR RBC CAPITAL MARKETS IN PORTLAND, MAINE"

"It's fear and panic at this point. Investors have seen similar movies this year and the endings are very unpleasant. They are deciding to shoot first and ask questions later. Unfortunately, people don't have confidence."

(Reporting by Joseph Giannone, Elinor Comlay, Phil Wahba, John Parry, Svea Herbst, Leah Schnurr and Jonathan Spicer)