The Federal Deposit Insurance Corp. announced yesterday that it has hired an investment banking firm to advise the agency on selling the 160 million shares of Continental Illinois Corp. stock it acquired when it saved the giant bank company from failing in 1984.

The federal agency said that the giant Chicago bank has recovered sufficiently from its near-failure two years ago this month that the agency can "begin considering the sale of its stock position."

But the FDIC said in a statement that its retention of Morgan Stanley & Co. to advise it on its more than $1 billion investment in Continental does not mean that the agency has decided when or how it will sell the stock -- which it acquired for $4.50 a share.

Although Continental is far from completely recovered, it has earned a profit for seven consecutive quarters and last year earned about $150 million. Only two years ago, a massive run on the bank's deposits nearly pushed it into failure.

Only a multibillion-dollar rescue operation -- involving the FDIC, the Federal Reserve Board and other commercial banks -- prevented the failure of what was then the nation's eighth-biggest bank company, with about $40 billion in assets.

Today, Continental has shrunk to $30 billion in assets and is the 12th-biggest bank company.

The FDIC acquired its ownership interest in Continental as part of a $4.5 billion injection of funds into the bank. For that injection it received or will receive troubled loans with a face value of $4.5 billion -- although the agency said in March that it will lose $1.3 billion on its investment in those loans.

The FDIC has a lien on the 40 million of outstanding shares of Continental stock it does not now control and can use those shares to offset some of its losses on the Continental loans it acquired to clean out the losses in the Chicago bank's portfolio.

The agency also received $720 million in preferred stock that can be converted to 160 million shares of Continental common stock as well as $280 million of another preferred stock issue that pays dividends to the FDIC.

Continental Illinois stock has sold for about $8 a share in recent weeks.