NEW YORK (Reuters) - Wachovia Corp said yesterday that it will pursue a deal to sell itself to banking rival Wells Fargo & Co. despite an attempt by Citigroup Inc to block the deal.

Citigroup, the largest US bank, is also courting hobbled Wachovia and late on Saturday said it had won a court order blocking Wells Fargo from buying Wachovia until the court ruled.

Citigroup and Wells Fargo are battling for the sixth-largest US bank, which has suffered losses in the credit crisis but has a large and desirable network of bank branches.

Citigroup said last Monday that it agreed to buy Wachovia's banking assets for $2.2 billion in a deal backed by the US government. But on Friday, Wells Fargo said it had signed an agreement to buy the whole of Wachovia, including its asset management unit and retail brokerage, for about $15 billion.

But Wachovia said its agreement with Wells Fargo is valid and proper, and is best for shareholders, employees and US taxpayers. Wells Fargo said in a statement it has a binding merger agreement with Wachovia, and its deal, which keeps Wachovia intact, is better for all of Wachovia's stakeholders.

"We are confident that we will complete our announced merger with Wachovia. Nothing in the court's temporary order impacts our ability to ultimately do that," Wells Fargo said.

Meanwhile, the Wall Street Journal, citing people familiar with the matter, said Citigroup offered last week to significantly boost the price it was paying to buy most of Wachovia, and the proposal remains on the table.

The Journal said the exact terms and structure of Citigroup's sweetened bid for Wachovia were not clear.

A spokesman for Citigroup could not be reached immediately for a comment on the report.

Citigroup announced Monday it had agreed to buy Wachovia's banking operations in a deal backed by the U.S. government. That deal did not include a signed merger agreement, but Wachovia did sign an agreement to only negotiate with Citigroup through Monday, October 6.

On Friday, however, Wells Fargo said it had signed an agreement to buy the whole of Wachovia, upstaging Citigroup's government-backed bid.

Late on Saturday, Citigroup said New York State Supreme Court Justice Charles Ramos granted an injunction extending Wachovia's agreement to negotiate exclusively with Citigroup.

The Wall Street Journal report said that on Wednesday evening, Citigroup executives told Wachovia that they were prepared to pay substantially more than the $1 per share of Wachovia stock that both banks agreed to under the original deal.

But the Journal said that before Citigroup and Wachovia could hammer out details of a revised bid, Wells Fargo made its own offer and Wachovia's board endorsed that offer on Friday.

Citigroup said in its statement on Saturday that it was prepared to continue negotiating with Wachovia, but that Wachovia may not speak to others.

Wachovia spokeswoman Christy Phillips-Brown said: "Citigroup is always free to make a superior offer to Wachovia."

Citigroup, which has sustained about $60 billion of write-downs and losses during the credit crunch, planned to buy Wachovia's banking assets with US help, including partial government guarantees on a $312 billion Wachovia loan book.

Some lawyers believe that Citigroup could have a real case in working to block the Wells Fargo deal, noting the exclusivity agreement and the fact that Citigroup provided financial support to Wachovia last week.

"Those are clearly strong facts on Citi's side," Morton Pierce, chairman of the mergers and acquisition group at law firm Dewey & LeBoeuf, said on Friday. Dewey & LeBoeuf is not representing any of the parties in the transaction.

Wells Fargo, the seventh-largest US bank by assets, has managed to remain consistently profitable during the credit crunch. Its bid would not require government backing.

Wachovia is the latest casualty of a crisis that has led to shotgun sales of Bear Stearns Cos and Merrill Lynch & Co Inc , the near collapse of American International Group Inc , and the bankruptcies of Lehman Brothers Holdings Inc and Washington Mutual Inc.