Shares of J.P. Morgan & Co. surged $7.625, to $146.75, Thursday as brokers at Warburg Dillon Read talked up the stock as a takeover target.

The brokers began advising clients after meeting Thursday morning with analyst Thomas Hanley, who outlined potential merger scenarios.

Reiterating his recommendation from a report in April, in which he identified the venerable New York banking company as a target, Mr. Hanley said the buyer is likely to be one of several companies eager to build their investment banking businesses: Chase Manhattan Corp., Goldman Sachs Group Inc., First Union Corp., or Morgan Stanley Dean Witter & Co.

Morgan "may decide to sell out over the next year or so," Mr. Hanley said in his April report.

A spokesman for Morgan said the company does not comment on market rumors. One trader said the enthusiasm was overdone. He said the stock would probably fall back in coming days when no deal materializes. Morgan has been subject to takeover speculation for the past six months, following losses in last fall's market slump.

The boost in stock price added $2 billion to J.P. Morgan's market capitalization on a day when other stocks posted modest increases.

The Standard & Poor's bank index added 1.96% and the Dow Jones industrial average 0.97% The Nasdaq bank index added 0.61% and the S&P 500 0.26%

Shares in the companies Mr. Hanley listed as buyers rose with the market. Signs that inflation is at bay-and interest rates will remain stable-were displayed in the government's report on producer prices.

The Labor Department said prices paid to factories, farms, and other producers rose 0.5% in April, matching its gain of December.

The core producer price index rate, which does not include food or energy prices, rose just 0.1%.

The small gain indicates that "inflation pressures remain dormant," said Gerald Cohen, senior economist at Merrill Lynch Global Securities.

Shares of Bank One rose $2.625, to $62.875, as analysts weighed in on chairman John B. McCoy's comments this month that the company would seek growth through the Internet, and not major acquisitions.

"While the new strategy is not guaranteed to succeed, we believe that aided by its First USA credit card division, Bank One is better positioned than most other banks to make it work," said Ronald Mandle, a banking analyst with Sanford C. Bernstein & Co.

The concept is that full-service Internet sites will be viewed by consumers as one-stop sites for meeting all financial needs, and that the first sites out there have the best ability to succeed over the long term.

Bank One is expected to launch its full-service Internet site in July or August, featuring a wide variety of products, some produced internally and others created by outside vendors.

The costs of the Internet project will come from other savings and should not jeopardize earnings per share, Mr. Mandle said.

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