Mercury Finance Co. shares have fluctuated wildly since the subprime auto lender, citing an accounting change, revised 1995 earnings downward and raised its reserves against losses.

Shares in the Lake Forest, Ill., specialty finance company plummeted $1.875 to $10.125 on news Monday that it lowered last year's earnings to $98 million from $110 million and took a $20.5 million charge to bolster loan loss reserves to approximately $140 million from $93 million, according to company officials.

With analysts insisting that the selloff was an overreaction, Mercury shares regained much of the lost ground Tuesday, rising $1.50 to $11.625.

Mercury, a leader in lending to customers with less-than-pristine credit records, has adopted a new system called "static pool" accounting. It entails tracking loans by region and on a monthly basis to determine appropriate reserve levels.

Traditionally, specialty finance firms, including Mercury, have set reserves based on historic loan losses of their entire portfolios.

The Securities and Exchange Commission, reacting to a glut of public offerings by specialty finance companies in recent years, is pressing for more conservative accounting to give investors a truer picture of the companies' prospects, analysts said.

"It's the right direction because it will help them make smarter loan decisions," said Michael Durante, analyst at McDonald & Company Securities. "Others will be playing catch-up, but in the meantime investors just see a company cutting its earnings and increasing reserves and they get concerned."

Another analyst said Mercury did a poor job explaining the accounting change.

Jack Peirce of A.G. Edwards called Monday's selloff an overreaction, but nevertheless downgraded Mercury stock to "maintain" from "accumulate."

He said the information the company released on the accounting switch left open the possibility that future earnings could be hurt. "It's difficult for me to recommend purchasing the shares," Mr. Peirce said.

In other news, bank shares were among the big gainers Tuesday in a broad stock market rally.

The rally seemed to pick up steam after traders returned from the World Series victory parade through New York's financial district for the New York Yankees. It was attributed to government reports that showed wage inflation under control.

Among those establishing new highs, were Citicorp, whose shares rose $2.375 to $97.375; Chase Manhattan Corp., up $1.375 to $84.50; Norwest Corp., up 87.5 cents to $43.25; First Union Corp., which rose $1.25 to $71.50, and BankAmerica Corp., up $2.25 to $89.875.

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