Corrects spelling of Pimco spokesmans name in 3rd paragraph.

A Lehman spokesman declined to comment, citing a policy against commenting on rumors and speculation.

Lehman shares fell as much as 18 percent Thursday, but took back some losses after Pimco spokesman Mark Porterfield said the company continues to trade with Lehman.

Lehman's shares traded at $17.47, down 11.5 percent, on Thursday morning.

(Reporting by Dan Wilchins; editing by Jeffrey Benkoe)