Updated from 3:09 p.m. EDT

Shares of AppNet ( APNT) tumbled Monday after the company, while acknowledging it was discussing a possible agreement with Commerce One ( CMRC), backtracked from an earlier announcement of a definitive merger agreement.

AppNet, a Bethesda, Md.-based Internet commerce consulting company, said the announcement of a merger was released inadvertently. Both AppNet and Commerce One, a Pleasanton, Calif.-based maker of business-to-business Internet software, confirmed the merger talks, but said no agreement had been reached.

Officials of both companies cautioned that "significant issues" must be resolved before the companies would agree to a merger. "Accordingly, there can be no assurance that any such combination may occur," the companies said in individual statements.

Trading in AppNet's shares was halted for most of the morning, but fell sharply after trading resumed, closing down 4 9/16, or 12%, at 34 1/2. Commerce One's stock ended the day up 11/16, or 1%, at 51 7/16.

Officials at either company could not be reached immediately for comment.

The earlier merger announcement said Commerce One would buy AppNet for stock valued at $1.38 billion, exchanging 0.8 of a share of its stock for each AppNet share.

AppNet provides consulting, marketing, and e-business application development services to facilitate communication and commerce between businesses and their trading partners and consumers. Commerce One links buyers and suppliers in real-time trading communities over the Internet.

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