Washington Mutual Inc. shares slid further from their record high Wednesday, when an analyst downgraded the stock and U.S. Bancorp's president dismissed merger rumors pairing his company with the thrift.

Shares in Wamu, as it is known, closed at $44.125, down 56.25 cents. They have been falling steadily since May 21, when they hit $50.9375.

The latest drop came as U.S. Bancorp chairman John Grundhofer debunked talk that his institution might be interested in buying the Seattle thrift, which is building a commanding presence in California through acuisitions. Also on Wednesday, Ken Posner of Morgan Stanley Dean Witter downgraded the stock to "outperform" from "strong buy."

Mr. Posner made the same adjustment to H.F. Ahmanson & Co., which Washington Mutual is slated to buy. Ahmanson was off $1.625, to $71.75.

Washington Mutual was thought by some to be a prospective merger partner following U.S. Bancorp's loss earlier this week of Wells Fargo & Co. to Norwest Corp.

But Mr. Grundhofer downplayed the notion that U.S. Bancorp would use a thrift like Washington Mutual to build business in California. He made the comments to a room full of investors at a Piper Jaffery conference in Minneapolis.

Washington Mutual still has plenty of fans who applaud fundamental operations and growth prospects.

In California and Florida the thrift is now applying "a proven strategy" that has been generating high returns for core Pacific Northwest operations, said Thomas O'Donnell, analyst with Salomon Smith Barney.

The strategy includes culling "enormous" cost savings and revenue enhancements from thrifts that Washington Mutual purchases and transforms, said Mr. O'Donnell, who rates shares a "buy."

Once Washington Mutual completes its purchase of Ahmanson, the thrift will make more acquisitions in the consumer finance, mutual fund, and consumer banking areas, Mr. O'Donnell said.

More and bigger deals are in the offing for the entire banking industry, said Nicholas C. Adams, portfolio manager with Wellington Asset Management, adviser to the First Financial Funds.

"Higher deal prices will be driven by investor acceptance of current stock valuations, management claims of cost savings and revenue enhancements, and the machinations of acquisition accounting which have led to ever increasing 'restructuring charges,'" Mr. Adams said in a letter to shareholders that was issued Wednesday.

Many big bank stocks rose for the day, after Federal Reserve Board chairman Alan Greenspan indicated that interest rates did not need to be bumped up.

Testifying before the Joint Economic Committee of Congress, Mr. Greenspan indicated that the economy is slowing, in part from troubles in Asia, and that inflation appears to be remaining in check.

Mr. Greenspan did, however, caution against too much dependence by investors on the prospect of corporate profits continuing to increase.

The Standard & Poor's bank index was up 0.40% and the Dow Jones industrial average lost 0.86%. The Nasdaq bank index dropped 0.69% and the S&P 500 fell 0.55%.

BankAmerica Corp. gained $1.125, to $86.75; Chase Manhattan Corp. was up 43.75 cents, to $142; First Union Corp. gained 18.75 cents to $58.625; and J.P. Morgan & Co. rose 68.75 cents, to $123.4375.

Wells Fargo gained $2.0625, to $355.0625, after a steep loss Tuesday in the wake of its merger accord with Norwest. Norwest ended the day up 31.25 cents, at $36.25.

Analysts continue to be leery of the $34 billion deal that aims to mesh Wells Fargo's high-tech operation with the community-based Norwest.

"You have to believe the banks' management will be consumed" with the task of pulling the merger off, said Ben Crabtree, banking analyst at Dain Rauscher.

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