Young & Rubicam (YNR) shares rebounded Thursday after the big advertising agency said first quarter earnings jumped 27% and topped Wall Street estimates by 2 cents.

New York-based Y&R, which is reportedly in merger talks with both

WPP Group

(WPPGY)

and French advertising holding company

Publicis S.A.

, said it earned 30 cents per diluted share, or $25.1 million, vs. 24 cents, or $19.7 million, a year earlier. Analysts surveyed by

First Call/Thomson Financial

had expected 28 cents per share.

Y&R shares surged 3, or 6%, to close at 52 7/8 Thursday. On Wednesday, Y&R

fell 4% after a published report said the agency was in talks to acquire direct marketing firm

Harte-Hanks

(HHS) - Get Report

for more than $2 billion.

Since then, WPP Group has confirmed that it has held talks with Y&R, and Publicis' name has emerged in published reports as the second suitor.

Overall, Y&R reported first quarter revenue of $448.3 million, a 16.8% increase over the same period a year ago. The agency added $440 million in new business for the quarter, up 80% over the same quarter last year.