WASHINGTON (AP) _ First Union Corporation, one of the nation's largest banks, agreed today to pay $58.5 million to 239 former employees to settle an age discrimination suit.

``I think it sends a strong message to treat your older employees fairly,'' said Paul C. Sprenger, a lawyer for the former workers.

U.S. District Court Judge Royce C. Lamberth approved the settlement, eliminating the need for a jury trial that was scheduled to begin next month.

The suit was filed in 1994 by former employees of First American and Meritor Savings, acquired by First Union respectively in 1992 and 1993. First Union is the nation's sixth largest bank.

The employees accused First Union of firing longtime workers in Washington, northern Virginia and Maryland and replacing them with younger, less-qualified workers.

``It affected me emotionally. It was a great turmoil,'' said Cynthia Johnson, 39, who was laid off from her job as a cash management representative in December 1993 after 13 years with First American. ``Those are years lost.''

First Union said in a statement the settlement was ``not an admission of wrongdoing but reflects a desire to end costly litigation that would detract from First Union's primary focus of serving customers.''

The bank said its hiring policies are ``designed to select the best employees regardless of age, race or any other protected status.''

First Union acquired Signet Bank earlier this year. With headquarters in Charlotte, N.C., the company has more than 2,000 branch offices in 12 states and the District of Columbia.

First Union had profits in 1996 of more than $1.4 billion and reported third quarter profits last week of $500 million.