NEW YORK (Reuters) - Washington Mutual Inc (WM.N) stock sank as much as 30 percent to its lowest level in 17 years and the perceived risk of its debt soared on concern it won't find a buyer or raise enough capital to combat soaring mortgage losses.

Shares of the largest U.S. savings and loan were down 60 cents, or 18 percent, at $2.70 on Wednesday on the New York Stock Exchange after falling as low as $2.30, the lowest level since January 1991, according to Reuters data.

Analysts attributed the decline in part to anxiety that potential buyers might walk away because of a pending accounting rule requiring that they value targets' assets at market prices, and perhaps the need to raise capital.

They also pointed to Lehman Brothers Holdings Inc (LEH.N), which said earlier it plans to sell a majority stake in its asset management unit and spin off commercial real estate assets. Lehman, Wall Street's fourth-largest investment bank, also posted a $3.93 billion quarterly loss.

"Lehman failed to find anyone to invest capital. With Washington Mutual potentially needing some in the future, the market is taking the opportunity to punish that company," said Jaime Peters, a banking analyst at Morningstar Inc in Chicago.

Washington Mutual did not immediately return a call seeking comment.

Earlier this year, it raised $7.2 billion from investors, including private equity firm TPG Inc (TPG.UL).

On Monday, the thrift ousted the longtime chief executive, Kerry Killinger, and replaced him with Alan Fishman, the former chief of Brooklyn, New York's Independence Community Bank Corp.

Washington Mutual lost $3.33 billion in the second quarter, and said cumulative losses from subprime mortgages and other home loans could reach $19 billion through 2011.

SHAKE-OUT

It now costs $4.3 million up front plus $500,000 annually to protect $10 million of Washington Mutual debt against default for five years, according to Phoenix Partners Group. That compared with $3.2 million on Tuesday.

Wednesday's level suggests that investors see an 85 percent chance of default within five years, according to Tim Backshall, chief analyst at Credit Derivatives Research in Walnut Creek, California.

"The market's shaking out who's going to be able to survive over the next year, and this is just part of the shake out," said Mirko Mikelic, portfolio manager for Fifth Third Asset Management in Grand Rapids, Michigan.

On Tuesday, Standard & Poor's lowered its outlook to "negative" for its "BBB-minus" credit rating, which is one notch above "junk" status.

Washington Mutual this week announced an agreement with its chief U.S. regulator, the Office of Thrift Supervision, requiring improved risk management and compliance. It said the agreement doesn't require it to raise capital.

Morningstar's Peters said the falling stock price complicates Fishman's task to nurse Washington Mutual back to health.

"Fundamentally, nothing has changed at Washington Mutual since he was named CEO," Peters said. "He already has a very difficult task ahead of him. His primary task is to stabilize loan losses, and keep capital at a level that makes regulators happy."

(Additional reporting by Herbert Lash and Phil Wahba)

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