Mergermania was back in full force Wednesday.

After a long dry spell, a $31 billion deal announcement by Citigroup and Associates First Capital (see article, "With Associates, Citi Extends Retail Power in U.S., Abroad"), two smaller bank deals (see articles, "BB&T Makes $104M Stock Deal For First Spartan of S. Carolina" and "N.J.'s Valley National Paying $376 for a Piece of Big Apple") - and a published report in Germany that Deutsche Bank might bid to buy J.P. Morgan & Co. - touched off a wave of speculative buying reminiscent of 1998. That year a record $278 billion of bank mergers were announced, making banking one of the hottest sectors of the stock market. On Wednesday much of the buying centered on specialty finance companies, as investors bet the Associates deal would inspire similar marriages.

Shares of Household International were up $2.5625, or 5.38% to $50.1875. CompuCredit gained $2, or 4.71%, to $44.4375; CIT Group Inc. was up $1.4375, or 8.61%, to $18.125; and Metris Cos. Inc., added $3.125, or 9.03%, to $37.75.

Moshe Orenbuch, an analyst at Donaldson, Lufkin & Jenrette Inc., had issued a report Sept. 1 recommending finance companies, citing their strong fundamentals and steady growth prospects. Wednesday's deal announcement by Associates was "the icing on the cake," he said.

Diane Yates of A.G. Edwards said Citigroup's strong share price gives it the currency to make more purchases in the credit card business and other finance sectors, and that "acquisition is a good way to accelerate" its growth.

Andrew Collins, an analyst at ING Barings, said the Citi deal might make other financial services companies more acquisition-minded. He added that Citi - which said international expansion was an impetus for the Associates deal - also might be interested in South American or Asian retail banks.

The American Banker index of the top 50 banks gained 0.7%, paced by a 4.88% gain for J.P. Morgan shares, and its index of 225 banks increased by 1.14%. Citigroup fell $2.5625, or 4.45%. And Chase Manhattan Corp. - mentioned as a possible buyer for both J.P. Morgan and Household - fell 62.5 cents, or 1.09%, to $56.50.

Bank of New York Inc. and Bank One Corp. took the largest gains, climbing $2, or 3.85%, to $53.9375, and $1.50, or 4.38% to $35.75 respectively. Among brokerages, Legg Mason Inc. gained $2.25, or 4.01%, to $58.375, and Bear Stearns Company Inc. gained $2.5625, or 3.75%, at $71.

Shares of J.P. Morgan surged as high as $172 in early trading, fueled by an article in the German magazine Wirtschaftswoche. The weekly argued that Deutsche Bank would cut a deal for the New York institution to keep up with competitors in the consolidating U.S. investment banking market. It reported that Deutsche Bank is moving to have its shares listed on the New York Stock Exchange, which would make it easier to do a big deal here. J.P. Morgan shares, which had gained 24% on merger talk in August, ended the day up $7.8125, to $167.75.

A Deutsche Bank spokesman in Frankfurt am Main said the firm generally does not comment on market speculation. However, Konrad Becker of the Munich investment bank Merck Finck & Co. said a deal involving Deutsche is unlikely. J.P. Morgan would be too expensive, he said.

Speculation about J.P. Morgan last month valued it at $200 a share, or about $32 billion.

Mr. Becker said Deutsche's U.S. strategy is to build it operation from the acquisition of Bankers Trust Corp., which closed last year.

The speculation sent Duetsche shares down 2.04% on Deutsche Boerse, the Frankfurt stock exchange.

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