First Republic Bank ( FRC) surged 40% after Merrill Lynch ( MER) announced it would buy the investment firm for $1.8 billion, or $55 a share. First Republic shares were up $15.36 to $53.66. Merrill Lynch shares were down $1.19, or 1.3%, to $93.34.

Premier Community Bankshares ( PREM) also soared after United Bankshares ( UBSI) announced a deal to buy the Virginia regional bank for $201 million in a cash and stock deal. Premier stockholders can elect to get either $34 in cash for their shares, or 0.93 of a United share for each Premier share. Premier shares were adding $12.90, or 64%, to $33.10. United shares fell 44 cents, or 1.2%, to $35.83.

Countrywide Financial ( CFC) climbed again on speculation that it could be acquired by Bank of America ( BAC). The Financial Times reported last week that BofA is in merger talks with the nation's largest mortgage bank. But a Sandler O'Neill analyst cast doubt on the merger talk, saying BofA is more likely looking to outsource some of its mortgage processing work. The mortgage lender's shares rose $1.61, or 3.8%, to $43.61.

Cowen Group ( COWN) sank after a Merrill Lynch analyst cut his rating on the investment bank's stock to neutral from buy. The analyst cited a lack of upside potential for the firm. Shares were falling 64 cents, or 3%, to $20.06.

MBIA ( MBI) fell despite settling a Securities and Exchange Commission investigation into the Armonk, N.Y., bond insurer's accounting practices. The bond insurer paid $75 million in penalties to settle an investigation into allegations it misused a so-called finite insurance policy to avoid booking a $170 million loss in 1998.