Mercantile Bancorp's stock continued to rise Friday as speculation mounted that the St. Louis banking company is for sale.

Mercantile gained $2.4375 a share, closing at $77.4375, with 812,500 shares changing hands-more than five times its average daily trading volume.

The bank's stock is up 12% since Aug. 29. An article in the St. Louis Business Journal Sept. 8 said Mercantile has been in merger talks with First Union Corp.

Other rumored suitors include First Chicago NBD Corp., Banc One Corp., and BankAmerica Corp.

Mercantile offered no insight Friday after the Securities and Exchange Commission asked it to make a public statement regarding any corporate development that would explain the movement and volume in its shares. The company said it would not comment on rumor or market activity.

Ronald Janis, a lawyer at Pitney, Hardin, Kipp & Szuch, Morristown, N.J., said, "A 'no comment' implies nothing is going on." If there is "material information" that would affect the stock price, he said, the bank would have been obliged to disclose it.

Though few observers had solid information, banking analyst Denis Laplante of Fox-Pitt, Kelton Inc., New York, said Mercantile has been trying to sell its credit card operation. "People may be misinterpreting that" as selling the whole franchise, he said.

Mr. Laplante said management does not want to sell "but may be put into a corner if someone puts a big offer on the table." He said a deal is unlikely, but added, "I've been surprised before."

Mercantile, with $30 billion of assets and No. 1 market share in Missouri, is rated a valuable franchise. NationsBank Corp., through its purchase of Boatmen's Bancshares last year, is No. 2 in Missouri.

Some observers said First Union might want to buy Mercantile to answer NationsBank's recent deal with Barnett Banks Inc. in Jacksonville, Fla., for four times book value. First Union has agreed to pay 3.5 times book for Signet Banking Corp. in Virginia.

Joseph Stieven, a bank analyst at Stifel, Nicolaus & Co., St. Louis, said Mercantile "has been a rumored takeover target for 10 years, and I've seen the stock do this before."

Elsewhere, the markets seesawed Friday, buoyed by positive economic news and a rising bond market early in the day and knocked lower in midday trading on concern that third-quarter results might disappoint.

By the close, the Standard & Poor's bank index reached 584.10, a 1.14% rise, while the Nasdaq index of smaller banks gained 0.76%, to 1,807.1. The S&P 500 index rose 1.24% to 923.91, and the Dow Jones industrial average rallied late in the day, up 81.99 points, or 1.07%, to 7,742.97.

Among Friday's investment rating moves, Associated Banc-Corp. was raised to "strong buy" from "moderately attractive" by analyst Wayne R. Bopp at Robert W. Baird & Co. CoreStates Financial Corp. was cut to "neutral" from "accumulate" by Thomas D. McCandless of Natwest Securities Corp., and First Security Corp. was raised to "buy" from "hold" by Michael Ancell at Edward D. Jones & Co.

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