NEW YORK (Reuters) - JPMorgan Chase & Co is in talks to raise its takeover offer for Bear Stearns Cos to about $10 a share in an effort to appease Bear shareholders angry with the cut-rate deal, a person briefed on the discussions said on Monday.

But the talks to increase the bid may still fall apart, and the timing of any announcement is uncertain, the source said.

JPMorgan's original agreement on March 16 to pay $2 per share in stock for Bear was widely considered a fire-sale price for the 85-year-old Wall Street investment bank. Bear collapsed as large subprime mortgage losses and falling confidence in the company prompted a run on the bank.

In pre-market electronic trading, Bear shares were up more than 50 percent at $9.15 with 50,500 shares changing hands. The stock closed Thursday at $5.96 in composite trading.

The original Bear takeover agreement was forged with the support of federal regulators, and the U.S. Federal Reserve is balking at the higher price, The New York Times said, citing people involved in the talks.

The newspaper said the Fed originally directed JPMorgan to pay no more than $2 per share to assure that it would not appear that Bear shareholders were being rescued.

Representatives of Bear and the Fed were not immediately available for comment. JPMorgan declined to comment.

An offer of $10 per share would value Bear at more than $1 billion. That price, however, is less than one-third of the stock's price on March 14, the last trading day before the original deal was announced. It is also less than 10 percent of the stock's price throughout much of 2007.

Jamie Dimon, JPMorgan's chief executive, grew convinced the merger was in jeopardy after spending much of the last week taking calls from indignant Bear shareholders, The New York Times said, citing people involved in the talks.

Among these shareholders was the British entrepreneur Joseph Lewis, who spent well over $1 billion on some 12.1 million Bear shares, including some as recently as March 13.

Last week, Lewis said he would take whatever action was needed to protect his investment, and might encourage Bear and third parties to pursue other transactions.

Bear shares closed on Thursday at $6.39, reflecting investor expectations that JPMorgan might raise its bid or that another suitor might offer a higher price. JPMorgan shares closed at $45.97.

SEEKING SHAREHOLDERS

According to The New York Times, Bear was seeking to authorize the sale of a 39.5 percent stake to JPMorgan on Sunday night, which under Delaware law it can do without shareholder approval. Both companies are incorporated in Delaware.

As part of the original agreement, the Fed extended a $30 billion credit line to JPMorgan to finance Bear's most illiquid assets.

JPMorgan was in talks with the Fed Sunday night to assume the first $1 billion of losses on Bear assets before the $30 billion cushion kicks in, the newspaper said.

The original agreement called for JPMorgan to swap 0.05473 of its shares for each Bear share.

(Reporting by Chris Reiter, Joe Giannone and Jonathan Stempel, additional reporting by Anshuman Daga in Singapore; Editing by Jean Yoon and John Wallace)

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