Is Mellon Bank Corp. for sale? Investors seem to think so.

The shares of the Pittsburgh-based bank are up 13% since early last week, with merger speculation driving much of the rise, analysts said.

The trading reached a crescendo Tuesday, with more than two million shares traded, or four times the average daily volume. On Wednesday, the stock rose $1.125, to $46.375, an all-time high, with 1.46 million shares changing hands.

"Management at Mellon may be open to being both an acquirer and an acquiree at this stage," said Michael Durante, a bank analyst at McDonald & Co. in Cleveland.

"Mellon could be attractive to banks in this country and to some foreign companies," he added. "Its Boston Co. unit provides global custody that would be important to the European and Canadian banks."

Much of the stock rise occurred after National City Corp. agreed to purchase Integra Financial Corp. for $2.1 billion Monday morning. Mellon had been rumored to be interested in a merger of equals with National City, and last month unsuccessfully tried to hook up with Bank of Boston Corp.

With Mellon's options diminishing, a sale of the company may be preferable, Mr. Durante said.

Also adding fuel to the merger talk is Mellon's weak stock price. Mellon trades at deep discount to its true value, said Michael Mayo, a bank analyst with Lehman Brothers. With roughly 50% of its income derived from fees, it should trade much higher, he said.

The two other banks Lehman Brothers ranked as trading at such deep discounts this year were Chase Manhattan Corp. and First Chicago Corp., both of which have agreed to mergers.

"A bank that trades at a large discount is vulnerable to be taken over," he said.

Also added to the mix is a changing shareholder base, which is dominated by institutional investors.

Activist investor Michael Price of Heine Securities, who helped sell Michigan National Corp. and Chase Manhattan Corp., owns about 500,000 shares.

That is a significant reduction from the 3.2 million shares Mr. Price's mutual fund owned in March, but some of the shares could have been sold to help finance Mr. Price's largest stake in Chase, said Mr. Durante.

Now that Heine has reaped hundreds of millions of dollars in profit, it could be ready to plow more cash back into Mellon, he said.

Several longtime investors have either sold or sharply reduced their holdings in recent months, reportedly because they were upset to learn of the bank's interest in Bank of Boston.

Mr. Durante predicted Mellon would fetch $60 per share in a sale, for an $8.5 billion deal.

Shares in First Interstate Bancorp, another takeover candidate, also continued to rise. The Los Angeles company's stock closed at $96.125, up $1.875 for the day and 8% for the week. Like Mellon, it was once thought to be too big to be bought, but investors are now betting banks like NationsBank Corp. might look to acquire the California regional.

In a case of propitious timing, Salomon Brothers Inc. analyst Bruce Harting upgraded California Federal Bank stock to "buy" from "hold" just hours before an appeals court affirmed another thrift's goodwill claim against the government (see related story on front page).

Mr. Harting cited increasing net interest margins, the thrift's efforts to reduce expenses, and an increase in earning assets.

As a secondary reason, he cited its pending case against the government. He said if it wins the case, the stock could rise well beyond his 12-month target of $12 per share.

CalFed finished up $1.625 at $15.875.

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