The gain on Monday also followed comments by Chairman Robert Rubin to the Financial Times that any successor to Chief Executive Charles Prince, who resigned Nov 4, would face 'no strategic constraints'.

The newspaper said this could make a break-up more likely for the largest United States bank and put NYSE Euronext chief John Thain in line to replace Mr Prince.

In afternoon trading, Citigroup shares were up US$1.14 (S$1.66), or 3.4 per cent, at US$34.24 on the New York Stock Exchange, after earlier rising to US$35.06. Shares of Citigroup have nevertheless fallen from US$55.70 this year.

Citigroup, Bank of America and JPMorgan Chase, the largest US banks, on Friday worked out the structure of a back-up fund to support structured investment vehicles that have struggled as credit market liquidity deteriorated, The Wall Street Journal and New York Times said.

'There may be relief among investors in seeing what terms for the SIV bailout will look like,' said Mr Matt Zuck, a senior portfolio manager at SKBA Capital Management in San Francisco.

'Citigroup has to get the SIV problem resolved because it has significant financial and reputational liabilities if it fails.'

Mr Zuck added that the stock may be rising after 'having overshot on the downside'. He said SKBA recently sold its Citigroup stock because it found better investments elsewhere.

Mr Andrew Wilkinson, senior market analyst at Interactive Brokers Group, said the ratio of call to put options in Citigroup stock was nearly 2-to-1 on Monday, indicating that 'investors are backing the hunch that shares will inevitably rebound ... The other alternative is that investors are buying Citi shares and taking in the premium to enhance yield'.

Shares of New York-based Citigroup now trade at about eight times estimated 2008 earnings, after having traded much of the year closer to a 10-times multiple. -- REUTERS