Shares of M&T Bancorp rose the most in two months after reports that the Buffalo-based lender had restarted talks about combining with Banco Santander SA's Sovereign Bank unit.

M&T, whose second-largest shareholder is Warren Buffett's Berkshire Hathaway Inc., climbed 5.8%, to $90.43 at the close of Tuesday's New York Stock Exchange composite trading. The shares advanced as much as 8.1%, the most since June 17.

M&T and Banco Santander, Spain's biggest bank, have contacted regulators including the Federal Reserve and are reconsidering a deal after talks stalled in May, the Financial Times reported, citing people familiar with the matter.

Buying Sovereign "makes the most strategic sense" for M&T and could add about $1 per share to earnings, analyst Matthew T. Clark of KBW Inc.'s Keefe, Bruyette & Woods Inc. wrote in a note Tuesday. Santander might get 35% of M&T, he wrote.

"M&T would retain majority ownership, gain earnings accretion, eliminate a competitor and add a stronger international partner as a minority owner," Clark wrote.

The companies scheduled a meeting for their top executives about the possible combination, two people with knowledge of the matter said in June. The executives disagreed then over who would control the post-merger firm.

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