I looked in to this awhile ago after slaughtering the residents of Grobb and then having pangs of remorse, and unfortunately I don't think there is any way. You can raise the Grobb guard faction (although it's really hard, as there's only a couple mobs in the game you can kill to do so), but AFAIK there is no way to raise the merchants faction.
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Loramin Frostseer <Anonymous>, Hetch<Anonymous>, Tecla <Kingdom>, ...
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